Insurance may be cheaper than you think
Property purchase is likely to be your largest financial commitment. For a fraction of the cost of a mortgage it is usually possible to insure against unexpected circumstances that could result in the loss of your home.
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One of the most devastating circumstances that leads to a property having to be sold is loss of income. Let’s face it, very few people have the luxury of significant surplus income, so a period of lost or reduced earning can have a serious effect on our ability to service a mortgage; this could ultimately lead to the repossession of a home.
The most common situation that leads to reduced earnings is illness/disability. Your employer may cover your income for period of sickness but what happens if an illness lasts beyond the period of support from your employer? Permanent Health Insurance (PHI), also known as income protection is the answer. This is not to be confused with Payment Protection Insurance.
Another potential problem is redundancy. Again, your employer may make a redundancy payment. The statutory minimum is 1 weeks pay for each years service, capped at £430pw. Your employer may be more generous. Redundancy cover could provide income to pay your mortgage for a period of 12 months or until you find alternative employment.
Death andor serious illness is devastating for a family. From an income perspective it is often unrecoverable. Life assurance is the cornerstone of all insurance and can include critical illness cover should the illness be so serious yet death does not occur. It’s not the most pleasant subject to talk about but is an absolute necessity.
Finally, there is buildings insurance – this is compulsory by all lenders and can include contents insurance to protect your possessions. Incidentally, it’s amazing how many people insure contents but not their life!??