Should You Buy Mortgage Payment Protection From Your Lender?

By: Simon Christopher

So, you've done your home work and found the best mortgage for you with a great rate that should save you money. This is where many borrowers let their guard down and end up paying way over the odds for insurance sold to them by their new lender.

Whilst, Mortgage Payment Protection Insurance can be a financial life saver should you be unable to work through illness, injury or even redundancy, some borrowers are paying a significant proportion of their monthly payment to the lender in insurance premiums.

Mortgage Payment Protection Insurance or MPPI for short is a protection plan for mortgages which helps you to make your repayments for a specified period of time should you lose your job or fall ill so that you are unable to work. This ensures that you do not lose your home or your property, and can pick up pretty much where you left off when you have recovered.

It seems pretty obvious that if you can afford the monthly premiums, this cover can be a good investment in your financial future should the worst strike, which is why we insure anything anyway. Whilst MPPI is not compulsory, it can certainly come in handy and help you through the rough times and even help you to keep your home. Before you head to your lender to sign up, though, there is something that you should know.

Lenders are not obligated to tell you that you can buy mortgage payment protection from many different sources including the internet. Without this vital bit of information, many consumers buy this cover unaware that they can potentially save themselves thousands of pounds over the term of a mortgage. Of course, at the time, most applicants are so focused on being granted the mortgage they pay far less attention to the value of any related insurance they are offered.

Therefore, buying MPPI from your lender can mean a lot of wasted money that could easily be saved by shopping around for cover from other providers. In such a competitive market, many insurance companies offer payment protection plans to help cover your mortgage and will often be able to provide premium rates that are significantly lower than those offered by mortgage lenders for exactly the same or even better cover.

So, do not let your mortgage lender fast talk you into signing up for a payment protection plan that you do not have to buy from them. The commissions these policies can pay are often significant which can mean you receive a very well motivated sales pitch. Hold your ground and politely tell them that you will consider it, and remember to explore your options by using a broker or by comparing companies on the internet. You are almost certain to find a company or two that satisfies your requirements with nothing more than a simple internet search. Just be sure to know what you need, read the small print and take advice from an independent expert if you are unsure.

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