Our guide to mortgage insurance explains the ins and outs of mortgage insurance and what you need to put in place to protect your family.
Buying a home is an exciting milestone, but navigating the paperwork and the move can be stressful. While it’s natural to focus on the property itself, the true foundation of any mortgage is the security of knowing that you and your family can stay in your home, no matter what challenges you may face. That means that putting the right protection in place, during the buying process (or reviewing for a remortgage), could be the best option, rather than waiting until later.
At Liddle Perrett, you are at the heart of everything we do. Our approach is straightforward: we get to know you, your lifestyle, and your needs so we can find the right options to protect your most valued assets.
In our guide to mortgage insurance we look at what mortgage protection costs, what it does, and why the “when” is just as important as the “what.”
Our guide to mortgage insurance: What is Mortgage Protection?
Table of Contents
We believe in keeping things clear. Mortgage protection isn’t just one product; it’s a toolkit designed to keep your home safe if your circumstances change.
- Life Insurance pays a lump sum if you pass away during the term, ensuring your family can pay off the mortgage and stay in their home. Decreasing Term insurance, in particular, is suitable for covering a standard repayment mortgage, as the cover amount reduces as your mortgage debt does.
- Critical Illness Cover pays a lump sum if you’re diagnosed with a serious illness like cancer or a stroke, helping with medical costs or paying off the mortgage while you focus on recovery. Adding this cover is a popular choice for peace of mind, as you are statistically more likely to claim for a serious illness than for life insurance.
- Income Protection provides a monthly income if you can’t work due to illness or injury, covering your regular bills, food, and childcare—not just the mortgage.
Typical Costs and Why Timing Matters
The terms of your protection depend on personal factors, including your health, your job, and whether you smoke. However, the most critical factor is often your age, which means acting early is crucial to secure your policy for the entire life of your mortgage.
When choosing your coverage, consider the purpose of each type. Decreasing Term insurance is specifically suitable for covering a standard repayment mortgage. Adding Critical Illness cover is a popular choice for peace of mind, as you are statistically more likely to claim for a serious illness than for life insurance. Income Protection is designed to provide a monthly benefit if you cannot work due to illness or injury, covering your regular bills, food, and childcare.
The Importance of Timing and Transparency
The price of your protection is determined by several personal factors, including your health, your job, and whether you smoke. However, the most critical factor is your age.
How and Why Costs Can Increase
By acting early, you secure your policy for the entire life of your mortgage, locking in lower rates for decades. Prices start to rise as you get older, and health increasingly becomes a factor. As you near age 55, costs increase significantly due to the higher risk perceived by insurers.
Understanding Your Policy Options
When considering protection, remember that Critical Illness cover is a popular choice for peace of mind, as you are statistically more likely to claim for a serious illness than for life insurance. Income Protection is designed to provide a monthly benefit if you cannot work due to illness or injury, covering your regular bills, food, and childcare. For covering a standard repayment mortgage, Decreasing Term insurance is often even more cost-effective because the cover amount reduces as your mortgage debt does.
When is the Best Time to Set it Up?
No question is too small when you’re going through a major life change. While we can help you review your cover at any time, there are key moments when it’s vital to act.
Milestone | When to Act | Why? |
Buying a Home | 30 days before completion | Ensures cover is ready to go the moment you are legally responsible for the debt. |
Drawdown | 3-7 days before funds move | Makes sure there is no gap between your mortgage starting and your cover being live. |
Remortgaging | During the process | If your mortgage amount increases (e.g., for home improvements), your cover needs to match. |
Keeping it Honest: The Secret to a Successful Claim
We have published this guide to mortgage insurance because we want to make sure your family gets the right money at the right time. Insurers pay out over 97% of claims, but most rejections happen because a detail was not fully disclosed during the application stage. For a successful claim, it is vital to be completely honest about everything, such as a smoking habit or your full medical history. Full disclosure at the outset is the key to ensuring your family gets the money they need, when they need it.
Whether you’re a first-time buyer or looking to remortgage, our team is here to support you every step of the way. We take the time to understand your needs, so you can focus on enjoying your home, knowing your future is secure.
Disclaimer
This guide to mortgage insurance is for general information only and does not constitute personal advice. The right protection for you will depend on your individual circumstances.
Policies are subject to underwriting, terms, conditions, and exclusions. Not all claims will be paid in every circumstance.