Mortgage Payment Protection Insurance (MPPI) is particularly suitable
for those who are worried about illness or redundancy and the effect
that this has on keeping up mortgage repayments.
Once upon a time the state paid the interest on your mortgage for
you if you were unemployed or too ill to work. In 1995, however,
the government implemented a new system and is now encouraging homebuyers
to take out private cover for their mortgage payments.
This is called mortgage payment protection insurance (MPPI) and
has been introduced as an alternative to State intervention. The
aim of Mortgage Payment Protection Insurance is to cover your mortgage
payments should you be made redundant or fall ill and become unable
to work. A policy should cover your monthly interest, capital repayments
and any other additional expenses such as investments used as repayment
vehicles, as the cost is based on the size of your monthly mortgage
expenses.
As with any insurance policy, you pay a premium each month towards
your Mortgage Payment Protection Insurance and, if the worst happens,
the policy will start to pay out after the excess period. There
are a variety of mortgage protection insurance policies available.
You can go to an independent broker for your policy, or your mortgage
company may offer Mortgage Payment Protection Insurance as part
of your mortgage deal.
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