Mortgage Redundancy Insurance

If you’re made redundant and can’t move to another job immediately, you may struggle to meet your monthly mortgage repayments. Mortgage payment protection insurance (MPPI) can help reduce your worries should this happen.

By following this guide you’ll have a better understanding of all the different options available, what each level of cover can provide and where to look for help and guidance.

What is mortgage redundancy cover?

Mortgage redundancy cover, or MPPI, is a type of insurance that will cover some, or all, of your mortgage repayments following redundancy. It’s tied to your mortgage, unlike other forms of income protection, where the cover can be used to pay for any of your bills or expenses. The payment will be made directly to you so you can continue paying off your mortgage.

How does MPPI work?

You can purchase three kinds of MPPI:

• Unemployment only: This protects your mortgage repayments if you are made redundant.
• Accident and sickness only: This protects your mortgage repayments if you are injured or unwell to the point you can’t work.
• Accident, sickness and unemployment: This combines the first two types, so your repayments are covered for redundancy plus accident or sickness.

For redundancy cover, you would need to make sure your policy includes unemployment protection. The cost of purchasing unemployment cover on its own will be lower than including accident and sickness.

How much does it cost?

Cost may also vary depending on:

• Age
• Mortgage repayments
• Occupation

If you want to include accident and sickness insurance as well, desk-based jobs will be cheaper to cover than those with a greater risk. You could also choose a ‘back-to-day-one’ policy which backdates cover to your first day off work.

The average monthly premium is around £20 but depending on your circumstances could range from under £10 to just over £40. If you speak to a mortgage broker, they’ll be able to help you find a quote for MPPI that best suits your own personal circumstances.

How can mortgage redundancy cover help you?

In some cases, you may be able to claim up to 125% of your mortgage payments in the event of involuntary unemployment, which could be useful to cover bills and expenses. However, many policies have an upper payout limit of around £1,000 – £2,000 per month.

Your cover will probably include a waiting period after your unemployment date, during which time you’re not able to make a claim. This is usually between one and three months and most policies will only cover you for up to 12 months in total.

If you choose a ‘back-to-day-one’ policy, you’ll receive extra payments to cover the time since your first day of unemployment, but as these are backdated, it’s important to make sure you have enough savings to cover the waiting period.

How to get mortgage redundancy cover

If you’re looking to include redundancy cover, there’s a few options available to you:

Are there any restrictions?

Yes, there can be. You may not be able to get cover if you’re in part-time, self-employed or temporary employment. However, there are other types of insurance, such as income protection, that might be available.

If redundancies have already been announced at your place of work at the time of purchase, you may not be able to claim on your cover, so it’s best to buy this insurance long before you’ll need it.

Additionally, if you are purchasing accident and sickness insurance with unemployment cover, you may not be accepted if you have pre-existing conditions.

Other circumstances where MPPI wouldn’t pay out include:

• Voluntary redundancy
• If you resign of your own volition
• If you’re sacked from your job due to misconduct

In light of the COVID-19 pandemic, the number of insurers offering redundancy has dwindled. Rather than spending time searching for a provider, get in touch with us to speak to a broker who will know which insurers are offering the right kind of cover for you.

What are the alternatives?

There are several kinds of insurance that could help you cover your mortgage payments if you’re unable to meet the costs.

Bear in mind that these will be more suitable for covering sickness or even death, rather than redundancy:

Speak to a broker about mortgage redundancy cover

Working with a mortgage broker can make it easier and cheaper to find the right cover. A broker who specialises in mortgage redundancy cover will be able to discuss your personal circumstances and run through the options with you.

With access to the entire market, they will have access to offers you wouldn’t be able to find yourself. We can match you with a vetted broker, whose specialist expertise in this area will boost your chances of finding the best deal.  Give us a call today on 0808 189 0463 or make an enquiry and we’ll set up a free, no-obligation chat between you and your ideal advisor today.