Redundancy Insurance, Income Protection etc.

Eezageeza

I was assessing my wife and my finances recently and the thought occurred: we have insured ourselves against redundancy (125% of our mortgage interest will be paid for up to 2 years if either of us are made redundant), as well as having income protection insurance and life insurance. Therefore, surely we must be a pretty low-risk to our mortgage company, and we should be offered a better rate when it's renewal time.

I know that mortgage companies assess LTV as well as income in order to guage risk when applying for a mortgage. Therefore, surely there should be some consideration given to whether the applicants have insurance to protect mortgage payments.

Does anyone know of any mortgage companies that do recognise this?

Thanks for your help.

_Andy_

No lender does that.

dunstonh

Therefore, surely we must be a pretty low-risk to our mortgage company, and we should be offered a better rate when it's renewal time.

What is to stop you cancelling after you get the mortgage? What if you lied on the insurance application forms? What happens after 12 months when the unemployment payments cease?

The lender gets their money whether you insure yourself or not. That is why they take a charge on the property. The insurance is for you or your spouses benefit. Not the lender.

Does anyone know of any mortgage companies that do recognise this?

None.

Eezageeza

Thanks very much for replying guys.

dunstonh wrote: »

What is to stop you cancelling after you get the mortgage? What if you lied on the insurance application forms?

I thought the same thing, but then I thought that this is no different than lying about your income or lying about having buildings insurance when you apply. In fact, most mortgages require building insurance to be maintained, so I don't see payment protection being any different.

dunstonh wrote: »

What happens after 12 months when the unemployment payments cease?

True, but you are still lower risk of defaulting (just not zero-risk).

dunstonh wrote: »

The lender gets their money whether you insure yourself or not. That is why they take a charge on the property. The insurance is for you or your spouses benefit. Not the lender.

True, which is why it's a good idea.

I suppose I'm just surprised that in a competitive market place, lenders haven't thought to offer a discount for these lower-risk people, in the same way that they offer lower rates to those who have a greater percentage of equity (and are therefore lower risk to the lender).

Ountz

Sorry to post in your thread Eazageeza but I have a question about Mortgage insurance too. I was made redundant at the end of last year and have been receiving Mortgage insurance payments since. My question is, does this affect your credit rating in anyway?

_Andy_

Ountz wrote: »

Sorry to post in your thread Eazageeza but I have a question about Mortgage insurance too. I was made redundant at the end of last year and have been receiving Mortgage insurance payments since. My question is, does this affect your credit rating in anyway?

on the assumption that the mortgage payments have been made in full and on time, no.

Ountz

_Andy_ wrote: »

on the assumption that the mortgage payments have been made in full and on time, no.

They have been made in full and on time. Thanks Andy.

luckyfool

Ountz wrote: »

They have been made in full and on time. Thanks Andy.

The fact that you're mortgage payments are being made by the insurance will not hurt your credit score. Having said that applications for new credit just now will take into account the fact that you do not have a job and that will obviously hurt your credit score and affordability. Lenders will not take redundancy insurance payments as income generally. i.e. You would likely not be able to get a new mortgage until you are working again unless your partner earns enough in their own right to support a mortgage.