Mortgage Protection
Buying a house is likely to be one of the largest investments and happiest moment for most people. Having taken the loan it makes logical sense to protect the mortgage against any unforeseen eventuality e.g. death, critical illness or long term sickness. Most people take a fully protected mortgage to make sure their loved ones aren’t left facing a repossession after the death of a bread winner. The costs are surprisingly low and should be budgeted for as part of your monthly costs.
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Mortgage protection is part and parcel of the mortgage process. Most lenders recommend that suitable protection is put into place to protect the loan amount and the monthly payments in the unforeseen eventuality of death, critical illness or long term sickness.
It makes perfect sense to do so. Why would you insure your car and not the house you live in?
Mortgage Protection comes in the following forms;
Life Insurance – This life policy can be on a sole or joint basis and the cover can be on a level or deceasing basis both with fixed premiums throughout the term. The policy can be for life cover only or critical illness cover only but usually it’s a combination of the two.
The life policy pays out the tax free sum assured if you die during the term of the policy. The policy is written into trust so the funds are paid to the beneficiaries quickly without the need for probate so the mortgage can be repaid. Any surplus sum can be used however the family wish.
If the policy has cover for Critical Illness then this is paid if a listed illness is contracted and the policyholder survives for a certain period after. This is also tax free and paid to the policy holder to use as they wish. They can clear/reduce the mortgage or use the funds on their healthcare. These plans are quite sophisticated and lots of bells and whistles can be added to make a bespoke policy.
For the self employed a regular income is essential. During times of long term sickness or injury the income can suddenly stop but the mortgage has to be repaid. An income protection plan that pays a monthly income after a short period is essential in ensuring the mortgage payments are paid on time. Late or missed payments will seriously has your credit profile going forward. The longer you can wait to receive funds from this policy the cheaper the plan becomes. Its an essential piece in the protection jigsaw puzzle.
Why choose us?
Here are a few reasons to choose Chess Mortgages.
Experienced advisers
We’ve been advising clients on mortgages for over 40 years.
We move fast
No need to wait; we respond & process applications quickly.
Whole of market
We scour UK lenders, private banks & offshore lenders for deals.
What you need to know...
Yes – normal mortgage protection policies are linked to the mortgage term but you take out a policy for your whole life. The cost for this type of policy is greater than a fixed term policy.
Yes – it can be joint or sole. In both cases the policy ceases after the first claim unless there is a provision for the survivors cover to continue.
If the payments are unable to be made due to long term illness some policies have payment protection built in them and the insurer will pay the premiums for you till you are better. If it’s for another reason then the insurer will cease cover. Cover can later be reinstated subject to medical underwriting but it is likely to be dearer due to an increase in your age or if there has been a deterioration in health.
No – they do not usually provide any investment value.
The funds fall outside the deceased’s estate so avoids inheritance tax on this sum and the funds are paid sooner to the beneficiaries as probate does not have to be obtained.
It is no longer the practice to take a legal charge. You can use your policy to cover any mortgage and take it from home to home.
We can arrange an add on policy either with the same insurer or another provider if the terms are better
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