So you finally heard back from the mortgage lender about your mortgage and its a yes. You are very excited but it's time to put your thinking cap on and ensure you have adequate insurance and cover for this huge debt in case anything goes wrong so you don't find yourself out of pocket if you fall ill or even worse your family doesn't find themselves without a roof over their heads if you die.
You might know about buildings insurance and maybe you know about contents insurance. In this brief guide we will discuss the insurance protection(commonly referred to as mortgage protection) you might need in place for your mortgage. You should ensure you compare insurance prices from different providers before you make a decision.
Aside from insurance , a will can also go a long way to help arrange your affairs in case you die. You can ask your solicitor who assists you when you are getting a mortgage to help draw up your will.
What is Buildings insurance?🏠
Buildings insurance is insurance for your house. It covers the structure of your home and if your home is damaged by fire, flood or even theft then you will be able to make a claim and get a payout from the buildings insurance provider. Most mortgage lenders will insist you have buildings insurance to ensure your building is protected in the event of any incident. This means you or your mortgage lender will not lose any money. The mortgage lender will assist you get this insurance before you exchange contracts with the person selling the home. Avoid accepting the mortgage lenders building insurance offer and shop around.
Your mortgage lender will insist you get buildings insurance if you are the freeholder of your home.
If you home is on a leasehold then your mortgage lender will not insist you get buildings insurance as the freeholder of the property will likely already have buildings insurance in place.
You can learn more about the difference between freehold and leasehold here.
What is contents insurance?🙌🏻
Contents insurance is insurance for the contents of your home. The insurance will also cover contents which you use outside your house often such as watches, phones and computers.
Buildings and contents insurance are usually bundled together and sold as one product.
What is Life insurance?💪🏻
Life insurance is essentially insurance that pays out after your death. It is essential as it can help cover the cost of your mortgage in case you die. You don't have to buy life insurance from your mortgage lender. You must ensure you compare life insurance from all providers before choosing a product.
What is Mortgage payment protection insurance(MPPI)?🧙🏻♀️
Mortgage payment protection insurance is insurance which will cover the cost of your monthly mortgage if you are unable to make your monthly mortgage repayments due to illness, loss of employment, an accident or a disability.
What is critical illness insurance?🚩
Critical illness insurance as the name suggests is insurance for when you are critically ill and can't make your monthly mortgage repayment. The critical illness has to be one which is specified in your insurance cover. If you successfully make a critical illness insurance claim the you will be paid a large lump sum.
What is Income protection insurance?⛱
Income protection insurance is insurance that will cover the cost of your monthly mortgage repayments if you cannot make them due to falling ill or being involved in an accident which led you not to work.