Mortgages: Essential Insurances and Protection to Protect Your Investment
Buying a property is likely to be the biggest financial commitment you will ever undertake. Your mortgage will be granted on both the value of the property and the proof that you have sufficient income to cover regular monthly repayments.
It makes sense to protect your investment, which you can do with an insurance policy.
There are several insurance and protection products on the market, so how can you be sure you are choosing the most suitable for you?
Buildings Insurance
Buildings insurance is required by mortgage lenders. It is a legal requirement and will be a condition of your mortgage. It covers you for the structure of the building. Your lender needs assurance that should they need to take back the property before you repay the loan, it will be of a sound structure, allowing them to sell it and recoup their money.
When is the best time to take out a buildings insurance policy?
You may think you don’t need buildings insurance until you are living in the property or are at least the owner. But the fact is that as soon as contracts are exchanged, your transaction becomes legally binding and we would always recommend you take out buildings insurance at this point.
Once you have moved into the property, it would be advisable to extend your policy to include contents.
Mortgage Protection
This is a form of life insurance that will cover any outstanding balance on the mortgage should one of the mortgaged parties die. It removes the financial burden from the surviving parties of having to make mortgage payments.
Family Income Benefit
Another type of life insurance in the event of one of the mortgaged parties dying. Family income benefit will provide a regular income for a specific amount of time. If mortgage protection has also been taken out, family income benefit can be used for expenses other than the mortgage.
Income Protection Insurance
None of us know what’s around the corner and the same goes for our income and employment. Income protection insurance will cover your mortgage costs for
a specified time, which can be invaluable in the case of redundancy. It is also beneficial in the event of long-term sickness. If you are employed, you may be entitled to a certain number of months full pay sick pay. After this period, your policy would start paying you a monthly income.
Critical Illness Cover
It is difficult to imagine having a debilitating or critical illness. You can take out a policy that will entitle you to a lump sum to help you out with bills, as well as buying you some time off to recover and recuperate.
There are dozens of different insurances and policies available to homeowners. Some insurance providers offer bundles with various types of cover, but these may or may not be right for you. Policies on offer can vary wildly from company to company.
It is always advisable to speak to a professional adviser to ensure you have the right level of cover. Swift Mortgages has access to a wide range of insurances and protection policies.
Please contact us before making any decisions and we will help you find the most suitable protection for your situation. Call on 01525 309300 or 07903 302895 or send us a few details and we will be happy to talk through the options with you.
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