Pressure is set to mount on mortgage holders to buy mortgage payment protection insurance (MPPI) cover, as leaked details of talks between debt charities and mortgage lenders lead to increased speculation of an additional burden on homeowners- claims online personal finance research and data analysts Moneynet.
Media speculation that record levels of missed mortgage repayments and the worrying debt mountain shouldered by UK homeowners will prompt the introduction of compulsory MPPI could give High Street banks a major payday, says Moneynet chief executive Richard Brown.
“Making this insurance compulsory would effectively mean substantial additional monthly costs would be passed on to homeowners, even if – as has been hinted – the Treasury demand that lenders and mortgage companies provide the cover as a bolt on to protect borrowers against falling into deep debt should they lose their jobs or be unable to work.”
' Currently, barely a quarter of homeowners have an MPPI policy in place. Should the worst happen, and the main breadwinner loses their job, then they currently have to wait for nine months before qualifying for any State help with the mortgage by way of Income Support Mortgage Interest payments – and this is not available if you have savings in excess of£8,000. '
“Even then, they are only given assistance towards the interest on their repayments, so for many people it makes sense to arrange cover,” says Brown.” Whilst we agree that for many people this insurance offers valuable protection, we would caution against accepting quotes from most of the High Street lenders, which are known to be extremely expensive when compared to stand alone policies.”
“MPPI cover can be bought through the likes of British Insurance or Paymentcare for a fraction of the cost of an identical policy offered by High Street giants.”
Monthly Costs for Accident Sickness and Unemployment Insurance per £1,000 of monthly mortgage repayment.
British Insurance £39.50
Bradford and Bingley £49.00
Source: Moneynet 18 September 2006
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