Mortgage insurance

What is Mortgage Payment Protection Insurance (MPPI)?

Broadly speaking, Mortgage Payment Protection Insurance (MPPI) is an insurance policy that the mortgage holder might take out to cover his or her payments for a period of time should they lose their job, fall ill, have an accident or a loss of income that results in them not being able to cover their monthly repayment charges.

Unlike other insurance policies related to mortgages such as Building Cover, MPPI is not compulsory. However, such policies may be worth considering as they can provide peace of mind in the unfortunate event that you lose your job or the ability to meet your monthly payments

How it Works?

Upon taking out the MPPI the mortgage holder will pay a premium to the insurer and will continue to make monthly payments for the duration of the mortgage. Often there will be exclusion periods built into the policies during which time you are not covered – a typical example being the first 60 days after taking out the policy. This is to keep premium costs down and is always advisable to check the terms of your policy before you sign up.

If an occasion arises where you fall ill, lose your job or other means of income that results in you not being able to meet your monthly mortgage payments then the MPPI policy takes effect, essentially this will be by covering your mortgage payments directly to the lender.

There are numerous MPPI policies available which cover some or all of the scenarios that may result in loss of ability to meet your mortgage payments from unemployment to injury to critical illness. It is therefore essential, if your are considering this type of insurance, that you check carefully the full criteria of what is and is not covered within the policy so that you are getting the right insurance for your personal circumstances. Consultation with an Independent Financial Advisor would be recommended.