Losing your job can be a stressful and difficult time. As well as having to find new employment you may also face worries about how you will continue to pay your mortgage and household bills.
That’s where redundancy mortgage protection insurance comes in.
With government support extremely limited, redundancy mortgage insurance can ensure that you are able to keep paying your mortgage if you’re out of work so that your home isn't ever at risk.
What is redundancy mortgage insurance?
Mortgage protection insurance for redundancy is designed to ensure that you continue to receive a monthly income if you are made redundant. This will help you to meet your mortgage commitment and you can often increase your cover slightly to include other important household bills.
Unemployment cover for mortgages will pay you a fixed monthly amount for a maximum period (typically 12 months) or until you return to work (if this is sooner).
Bear in mind that you are unlikely to be agreed for this protection if you are already under notice of redundancy or your company has already started a redundancy consultation procedure. Similarly, if you hand in your notice, or are dismissed because of misconduct then a MPPI policy is unlikely to pay out.
You will normally have a deferred period specified by your policy and this is the period where you have to wait before you make a claim after being made unemployed. You are usually given the option to set your deferral period yourself and can usually fix it at anything from immediate cover to 6 months.
If you need the policy to pay out straight away after you lose your job, then you would need to opt for a shorter deferred period.
However, if you will receive a significant redundancy payment or you have savings you can use then you may choose a redundancy cover for mortgage policy with a longer deferred period.
What should I look for when buying a redundancy cover for mortgage policy?
There are dozens of different policies on the market and so it makes sense to compare unemployment mortgage insurance quotes before you buy.
As well as comparing the cost of cover you should also ensure that you get a policy that provides the benefits you need.
For example, different policies have different maximum cover levels. You can normally arrange cover for 50-60 percent of your income to a maximum of around £1,500 per month. If you have a large mortgage, make sure that the cover is sufficient for your needs.
You should also establish what the terms and conditions of the redundancy cover for mortgage policies are. How long do you have to wait from the date of your claim until your first payment is received? And, how long does the cover last – is it for a maximum of 12 months or is it for longer?
Also, check the exclusions and eligibility criteria set by each policy you consider - this is paramount if you want to be confident you'll be able to claim if you ever need to.
