Identifying and arranging the perfect mortgage for your needs, and at the lowest possible cost, is arguably the easiest part of the whole process for our clients. Though it may take a few days for us to research the many choices available to you at any one time if you have sufficient income to support the repayments then putting the right mortgage in place for you is a relatively easy process for you.

However what causes our clients most problems is being able to repay back to the lender what was borrowed over the following 25 to 30 years at the agreed time every month and at the agreed amount.

If you are one of the fortunate ones and your career and financial situation goes according to plan than that may not be a problem, however for a lot of people this is not the case and being aware of the risks associated with repaying the mortgage is key to their peace of mind in ensuring that the likelihood of having their home repossessed is kept to a minimum.

These risk’s apply at a time when managing our finances successfully is harder than ever.
The good news though is that you can take steps to tackle these problems when they occur meaning you can prevent putting at risk the home you treasure.

The Financial Services Authority (FSA) have laid down specific rules for Professional Mortgage Brokers like ourselves to follow to firstly make you aware of what these risks are and secondly provide advice to you on protecting you against those risks, this is what is known as the ‘Fully Protected Mortgage’.

We at Mortgage Options will take the time and care in ensuring this conversation takes place with you on every occasion to ensure we can provide the necessary advice when it is needed.
Find below a basic guide to some areas of Protection that may apply to you during our discussions.

• Mortgage Protection Life Insurance
• Critical illness Cover
• Family Income Benefit
• Unemployment Cover
• Income Protection
• Payment Protection Insurance and ASU
• Buildings & Contents insurance

Mortgage Protection

Mortgage Protection Insurance is designed to repay the outstanding balance of a repayment mortgage in the event of a claim. A repayment mortgage is a mortgage loan where each month the interest due and some capital is repaid. During the early years relatively little of the loan is repaid each month with larger amounts repaid later in the term. The Mortgage Protection premiums are determined at outset and are usually guaranteed for the term of the policy.

Income Protection

Income Protection Insurance is designed to replace lost income during periods of incapacity. Statistically customers are much more likely to suffer a serious illness that prevents them from working than they are to die before they retire. Income Protection is therefore possibly likely to be of greater use to them than death insurance. Income Protection is designed to pay the policyholder a tax free income until the policyholder either recovers sufficiently to return to work, or the plan matures. This could mean the insurer is paying the customer an income for well over 20 years in a worst case scenario.

Payment Protection Insurance and ASU

Payment Protection Insurance and ASU differ significantly from Income Protection as they are specifically designed to protect the monthly repayment costs on a mortgage or loan, as opposed to providing a replacement income for the family.

In addition they have some significant limitations regarding the possible benefit payment terms and the underwriting process. Payment Protection Insurance and ASU generally only pay benefits for a fixed term of usually 12 months or 24 months. The deferred periods are also usually fixed. Payment Protection Insurance and ASU do have their uses for occupations that are un-insurable at affordable premium rates using Income Protection policies such as for a Scaffolder.

Unemployment Cover

This is normally paid over a maximum period of 12 months and provides you with sufficient monthly income over this period to cover your mortgage payments and associated costs.

Critical Illness Cover

The aim is to provide a guaranteed lump sum (or income if provided within a Family Income Benefit policy) if the life assured, during the period of cover, is diagnosed as having one of a number of specified critical illnesses covered by the policy.

The list of these typical illnesses is large but the most common of these are:

• Alzheimer’s disease - resulting in permanent symptoms
• Aorta graft surgery
• Bacterial meningitis - resulting in permanent symptoms
• Benign brain tumour - resulting in permanent symptoms
• Blindness - permanent and irreversible
• Cancer - excluding less advanced cases
• Coma - resulting in permanent symptoms
• Coronary artery by-pass grafts
• Deafness - permanent and irreversible
• Dementia - resulting in permanent symptoms
• Heart attack - of specified severity
• Heart valve replacement or repair
• HIV infection - caught in the European Union, the Channel Islands or the Isle of Man from blood transfusion, a physical assault or at work
• Kidney failure - requiring dialysis
• Liver failure - irreversible
• Major organ transplant
• Multiple sclerosis - with persisting symptoms
• Paralysis of limbs - total and irreversible
• Parkinson’s disease - resulting in permanent symptoms
• Stroke - resulting in permanent symptoms
• Third degree burns - covering 20% of the body surface area
• Total Permanent disability to age 65 - own occupation or work tasks definition
• Traumatic head injury - resulting in permanent symptoms
• Association of British Insurers (ABI) model definitions exist for these critical illnesses.
• No ABI model definitions exist for these critical illnesses and disabilities

Children’s Benefit

Most critical illness plans include a provision to pay out some benefits if the life assured’s natural, legally adopted (and sometimes step) children are diagnosed with a critical illness.

Buildings & Contents Cover

All Lenders insist that all of their mortgaged properties require an in force Buildings Insurance policy. This not only protects them but also the homeowner in the event of the property being destroyed or badly damaged resulting in it being rebuilt.

Contents cover is optional, but very advisable as it protects the homeowner against damage, theft or loss to your personal items in your home which often are valued into the thousands.
The sort of protection this provides is against, fire, flood and damage to these items.

Accidental cover is also very popular as it will provide payout to you, subject to conditions against accidental damage even if inadvertently caused.