Alternatives to insurance for covering mortgage payments?

Sheveko

Myself and two friends are buying a house together. The following clause deals with protection of mortgage payments.

7. COHABITANTS must put in place and maintain accident, sickness and unemployment protection sufficient to cover their share of the mortgage payments.

If someone has enough savings to cover payments could this be used as protection? If so, what would they need to do with their savings to ensure it could be used for payments?

What other forms of protection are there besides insurance, if any?

holly_hobby

I doubt the lender would permit your savings to be used as provision in this case, as you have the facility to withdraw either partly or wholly from the account, which may accordingly affect your ability to service the mortgage upon the event of accident, sickness or unemployment occuring.

An alternative to ASU or Mortgage Protection policy, for accident and sickess purposes only, may be met by a PHI (Permanent Health Insurance) policy. This should be written to dovetail with your employer benefits, and is payable from the date of benefit commencement, until your return to work or death (which ever occurs sooner), where as a ASU or MP policy will typically only pay a claim for a maximum of 12 months.

Have a chat with a whole of market broker for the most suitable ASU, PHI and term (death benefit) products that meet both lender stipulations, and your own requirements and budget.

Hope this helps

Holly

opinions4u

Sheveko wrote: »

Myself and two friends are buying a house together.

Make sure your solicitor draws up a watertight agreement to protect you all should one or more parties want out of the mortgage.

Mortgage with friends is something that commonly ends up as unsustainable debt and no friends.

Good luck!!

Sheveko

I've been having a look on money supermarket and can't find the type of insurance that covers payments until your mortgage is paid (or until your 65). The only ones I can find are the type that cover you for 12 months or so:
http://www.moneysupermarket.com/mortgage-protection/
http://www.moneysupermarket.com/payment-protection/

Am I looking in the wrong place?

holly_hobby

A PHI policy (payable in relation to lose of income through illness) or critical illness policy, may be written to assist (subject to protection limits re PHI) - but there are no unemployment policies that will cover you until death or 65 - (as you have already discovered and as mentioned in my earlier post on this thread, unemployment related protection (albeit incorporating some limited illness protection) i.e ASU/MP policies, will only pay for 12 mths).

Hope this helps

Holly