Do You Need Income Protection for Your Mortgage?
Income protection for mortgages offers financial security, but this type of policy can also be used to cover living costs too. If you are a homeowner with a mortgage, it’s more important than ever to ensure you can make your monthly repayments. If you were to fall ill or become injured, then this type of cover will enable you to pay your mortgage if you cannot work. In this blog, we look at the benefits of protecting your income and your mortgage.
Despite recent interest rates cuts, the Bank of England still expects an increase in households spending a high proportion of their income on mortgage payments. One prediction is that 30% of mortgage holders will see a £100 increase in their monthly payments by the end of 2026. Typical households could see their repayments rise by 28% to £180 per month and around 400,000 borrowers could see an increase of 50% or more.
One of the biggest reasons for protecting your mortgage is the increase in unmarried people buying homes together. Marriage rates are declining, and cohabitation is on the rise. Many couples are buying homes together without sufficient legal protection or income protection.
In one recent survey, 46% of people who bought a home with their partner said they did not pay equal amounts of the deposit and nearly 62% said their partner had paid the whole deposit. If one partner was to fall ill or become injured, this could add pressure to household finances, as well as putting their mortgage at risk.
Income protection insurance explained
If you or your partner fell ill or sustained an injury, which meant you were unable to work, would you be able to continue paying your mortgage? In these circumstances, an income protection policy can provide you with financial security at a time when you need it the most. This type of insurance pays out a monthly income to help you make your mortgage repayments.
Many people take out an income protection policy to ensure they can pay their mortgage should the worst happen. It differs from a critical illness policy, which only pays out a lump sum benefit for specified illnesses or medical conditions. In comparison, income protection will support you financially if you are unable to work due to any injury or illness.
Mortgage insurance
Mortgage insurance is a specific policy designed to only cover your mortgage. If you do not want to take out an income protection policy, then this is an alternative solution. However, the benefit of taking out an income protection policy is the fact that you can use the income to pay for other household bills.
At Bubble Finance Hub, our experienced Insurance Advisers will talk you through the different types of cover so you can find the right option for you. We will explain the policy benefits offered from different insurance providers and any terms and conditions. Our aim is to find suitable insurance for you or your partner at a cost that you can afford. Our expert Mortgage Advisers can also help you find a suitable mortgage for your home.
For advice on mortgages and insurance, please get in touch to book an appointment.
As with all insurance policies, conditions and exclusions will apply.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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