Your property is at risk …

… if you do not keep up the repayments on your mortgage.

There are, of course, many possible reasons for the increase in mortgage defaults quite apart from rising costs. These include changes in personal circumstances such as unemployment, ill health or death. Nobody really wants to think about the things that can go wrong in life, but failure to do so – and to plan for their possible consequences – can mean that you and your family could find yourself homeless, should the worst happen.

Yet it is so easy to protect your home against the chance of anything going wrong; and the cost need not be as high as you might think.

The most important form of protection, for any family, is to ensure that your mortgage – and any other borrowings – can be repaid in the event of death. Simple “mortgage protection insurance”, which pays out a lump sum on death that usually decreases as the mortgage is gradually repaid to keep the cost down, is a good starting point. But many people also like to have a “family income benefit” that will generate money each year for the balance of a pre-determined period, in order to help cover the cost of running the family home. Some people will arrange this to run out to the end of the original mortgage period, others may choose to have cover that carries on until the children are likely to be able to look after themselves.

Cover should apply to anyone who is involved in paying the mortgage, even if they are not a principal contributor.

There are other threats to your ability to continue paying your mortgages, however. These include the sudden loss of a job and insurance is available to provide sufficient money to pay your mortgage, usually for up to a year, so that you can get back on your feet without having to worry about losing your home as well as your job.

Illness can also be a threat to the family’s financial wellbeing … and your ability to cover the cost of your mortgage. Insurance can be arranged to cover just your mortgage along the same lines as unemployment cover (often called Accident, Sickness and Unemployment – ASU – Insurance) or for a higher amount to cover living expenses. Many people today also take out “critical illness” insurance, either on a stand alone basis or as part of their life assurance. This cover pays out a lump sum on diagnosis of one of a list of major life-threatening conditions.

As an alternative, cover can be arranged on a “permanent health” basis. This provides an income that can last right up until 65, if required. And if you recover, the policy is still there for you to use, should a further illness occur.

If you require any further information about the services that we provide or would like to review your financial planning position, please contact us

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