What protection policies should you consider for your mortgage?

First time buyers should consider protection policies with their mortgages

Tuesday 21 May, 2019

John Pringle, Mortgage Broker in Cheshunt, Hertfordshire reviews protection policies. In this article Ellie and John focus on first time buyers and consider why they should consider purchasing life cover, income protection and critical illness cover.

For most of us aiming to get on the property ladder mortgages is a large part of the house buying process. If we could afford to purchase a property outright most of us would avoid mortgages altogether, but unfortunately for most people that is impossible. 

What protection policies should you consider when you take out a mortgage?

One thing that has become more apparent is the need to protect yourself, your family and any children from any possible financial distress as a result of taking out a mortgage. Most clients are genuinely aware of their risks or when warned would consider protecting their family or children. However, in a worst case scenario most clients should consider:

  • Life cover
  • Income protection
  • Critical illness cover

This is an improvement compared to a decade ago when people overlooked the importance and the value of safeguarding and protecting themselves, their family and their home. 

Thomas Oliver mortgage brokers recommend first time buyers consider protection policies

Ellie Newman, Insurance Broker in Cheshunt, Hertfordshire, said: ‘One problem that still remains is with some of the younger generation especially those that don’t have a partner or children. As an insurance adviser who offers insurance advice to many first time buyers I often hear ‘it won’t happen to me’ or ‘I’m fit and healthy.’ I often use the example of house insurance and car insurance. When you buy a car or a house they are also fit and healthy but you still make sure you have buildings insurance and car insurance just in case something goes wrong. Consequently, I can’t understand why individuals aren’t willing to protect themselves as nothing is more important than your health and taking care of yourself. However, I realise from offering insurance advice to younger clients that many of them do not realise the likelihood of something happening to them and the costs involved if they do. They also don’t consider how it could adversely affect their lives, but will also bring an extra burden and responsibility on their family and those that care for them.’

Ellie Newman, Insurance Broker in Cheshunt, Hertfordshire, continued: ‘In this scenario I am not just talking about life cover because if you die your problems are over if you have no dependants or people that rely on you. The problem occurs if you were to have a serious illness and remain very much alive. Whether you have a mortgage or not if something serious was to happen that stopped you from working what would you do? A lot of young people say ‘I would live with my parents’ and some parents even say their children don’t need critical illness insurance as we would take care of them. I know when I hear this response from the parents that they mean well but the reality is - how do you expect your parents to look after you when they can just about manage to maintain their standard of living and are trying to save for their retirement? First of all it is not fair on them and secondly they may not be able to afford to look after you as a serious illness could mean additional costs for the bare necessities and the possibility of adapting the home because of disabilities. As a result by not protecting yourself you are not only being irresponsible but you are placing an extra financial pressure on those that love you because the reality is most parents and friends will do everything they can to help but they wouldn’t need to if you had the right protection cover in place. So all our mortgage brokers recommend everyone takes time and thinks through their response to protection cover because by saying no you are not covering the most important thing in your life - yourself.’

In summary - first time buyers should consider purchasing critical illness cover

John Pringle, Mortgage Broker in Tottenham, North London said: ‘Overall I agree with Ellie that the younger generation need to consider the harsh realities of life and how difficult it can if they don’t have critical illness insurance. At Thomas Oliver we believe parents can help discuss protection cover with their children to make sure they are being realistic. First time buyers and other young homeowners should remember that critical illness insurance tends to be cheaper when you are young and could cost you less than a mobile phone contract.  When I offer mortgage advice to young single first time buyers I tell them the honest truth and explain what really happens if they don’t protect themselves. Not protecting yourself can place a burden on your family or other people and could have a detrimental impact on everyone you love. It is worth remembering if you can’t take care of yourself how can you take care of anyone else? We recommend that anyone taking out a mortgage and especially first time buyers who are purchasing a home for the first time consider taking out mortgage protection policies.  We offer a free initial consultation with one of our North London mortgage brokers where we can discuss and explain the benefits of taking out life cover, income protection cover and critical illness cover. Please contact a member of the Thomas Oliver mortgage broking team on 01707 872000 for an appointment.’

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