Mortgage Information - Packages

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Mortgage Packages

Mortgages often come along with other products, as a package, and some of these extra products may be useful.

Mortgage Protection Insurance

Mortgage protection insurance is a term insurance to pay off the mortgage in the event of death during the term, it is not required with endowment mortgages that already have a life cover.

This is extremely beneficial for financial dependents, such as your partner or children. However if you have no dependents then this cover is not necessary. In the event of your death the house would be sold and the mortgage paid by the proceeds.

CLICK HERE for Mortgage Protection Insurance, Accident, Sickness and Unemployment

Mortgage Payment Protection Insurance

Failing to keep up mortgage payments could result in you loosing your home. Until 1995, if you became unemployed and, or your income and savings were low enough you were able to qualify for income support to cover half the mortgage interest payments during the initial 16 weeks. Now, anyone taking out a mortgage is excluded from claiming benefit for the first nine months.

The government expects people to take out a mortgage payment protection insurance, which pays out if you become unemployed, or sick. This insurance can be taken out even if you already have a mortgage.

Mortgage payment protection insurance has been available long before 1995, but had limited appeal due to the many restrictions, including a waiting period of three months before claims could be made. No cover for claims related to medical problems could be made.

Special care should be taken to read the terms of this type of policy in order to guarantee that it provides cover that is suitable for you.

The Association of British Insurers (ABI) requires members to recommend suitable policies and ensure that mortgage payment protection customers fully understand what they are buying. But these policies are often sold via mortgage intermediaries who have limited knowledge of these policies, and therefore it is very important that you read and check that the policy is suitable.

CLICK HERE for Payment Protection.

House Insurance

Banks and building societies make use of the commission received from insurance companies for arranging the sale of insurance policies, and so in some cases you are expected to take out house buildings and house contents insurance through the society or bank as part of the mortgage package.

CLICK HERE for Home Insurance

Flexible mortgage

These days many mortgage lenders offer flexible mortgages, which are appropriate to today's way of life. The insecurity of employment means that income may fluctuate widely, and so flexible mortgages enable:

Overpayments

Regular overpayments can quickly pay off your mortgage without any redemption penalties. Your outstanding mortgage balance is regularly recalculated, adjusting your interest payments.

Underpayments

Financial difficulties may mean that you are unable to make the regular payment and so with a flexible mortgage there is an option of reducing your payment, however this increases the outstanding mortgage balance.

Further Loans

An extra lump sum can be withdrawn from your mortgage account, without the formality of applying for a new loan. There are obviously conditions associated to this affecting the amount you are able to borrow.

(Not all of these factors are available with all flexible mortgages and features that are on offer are usually dependent upon the lender.)

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