Mortgage Protection – Why You Cannot Afford Not to Have It
Taking out a mortgage to buy a home is one of the most important steps in most people’s lives, however, it is also a major responsibility because you are at risk of losing your home until you pay off the last rate. For that reason it is completely normal to feel both thrilled and terrified because you can never know what life will bring until you repay your mortgage. And this is exactly why you cannot afford not to have a mortgage protection.
Mortgage unfortunately involves a number of costs, while the days of 100% and 125% mortgages appear to be finally gone. The lenders became a lot more careful about whom they approve a loan for a new home and in which amount. Most lenders require a deposit of at least 10% of the property’s value which means that you need £10,000 if you would like to buy a home that costs £100,000 for instance. Then there are various fees, while most lenders will also refuse to give you a mortgage if you do not take out home and life insurances. However, you do not need them just to get a mortgage but to protect yourself as well.
You are officially not obliged to protect your mortgage, however, a lot can happen before you repay your debt especially if you take out a mortgage for 20 years or more. Mortgage protection considerably increases the cost of the mortgage but it offers you protection in case you would find yourself unable to pay off your rates. If you think that you do not need a mortgage protection, you should ask yourself what would happen if you died prematurely? Would your family be able to repay the mortgage? What if you were made redundant? Critically ill? What if your home would burn to the ground? Would you be able to rebuild it? Despite the fact that most people never suffer such dramatic events, they do happen to someone. What if that someone will be you?
As you can see, a number of things can go seriously wrong before you repay your mortgage which is why you are highly recommended not to take any chance because it could mean losing your home. In addition to making sure that your life and home insurance meet the requirements of the lender, you should therefore also make sure that they cover you and your family against the greatest risks. This does not mean that you have to take out an insurance for everything you can think of but it is worth to take some time and choose an insurance policy which provides you with an adequate coverage in case you will need to make a claim. The very least you need is an adequate mortgage protection in case of death, redundancy, long term illness and insurance for the greatest risks in your area and fire against the value of your home. It is OK to shop around but be sure to read the small print and keep the documents somewhere safe from damage in case you will need them.