As the repercussions of the Credit crunch and recession begin to take effect, many people are beginning to question their job security. Most people’s lifestyle’s are based on the regular income their work provides. With unemployment figures set to reach two million by christmas the potential for mortgage arrears and repossessions is, at best, extremely worrying.
If you have financial trouble and are unable to meet your mortgage repayments most lenders will offer three months grace before instituting repossession proceedings, but given the climate there are likely to be many more applicants than available jobs. While the lenders are under serious governmental pressure to avoid repossion and seek alternative arrangements it is likely that many people will find themselves in no position to honour their debts in the foreseable future.
If you are unable to work you may be eligible for state benefits, however, these will not be available until you have been out of work for nine months- too long for many households. A specific insurance policy has been offered by many lenders and insurance underwriters known as Mortgage Protection Cover. The policy is designed to kick in if you are made redundant or fall sick, though most policies will only pay for twelve months. There are policies available that will cover twenty four months and also cover general household bills, but you can expect to pay significantly more for the added protection.
The manner in which mortgage protection cover has been sold has come under close scrutiny recently and in November the competition commission ruled that such cover could no longer be sold with a mortgage. Mortgage protection cover is not a legal requirement and given that up to one fifth of banks profits come from such policies the decision to break the direct link between Lenders and these policies has been well received. There is wealth of insurance policies available from income and life insurance to Mortgage and mortage life insurance. The costs and cover can vary massively and some forms of insurance may not suit your profile, so, as ever careful research is required and if the worst does happen the protection you have paid for will cover your circumstances.