PPI mortgage can also be referred to as mortgage PPI or MPPI. MPPI covers mortgage payments for the beneficiary is designed to make payments on behalf of the beneficiary in difficult situations that may disallow mortgage payments. These situations include loss of income due to illness, loss of employment, or death. The payments are made in exchange of monthly premiums of an agreed amount of money.
How PPI mortgage works
MPPI is taken out on the onset of a mortgage. There are premiums payable at the end of each month and in most cases included as part of the mortgage payment. You can dictate the amount of premium you want to pay. However, it is important to note that large amounts of premiums guarantee a higher mortgage payment in claims. The PPI can come to effect immediately after loss of ability to pay for the mortgage or after a few weeks. When taking out the cover, consider any benefits that will allow you to continue making payments even in sickness such as statutory sick pay. The payments can then start when other benefits are depleted. Once the claim starts to pay the mortgage, it can only do so only for a couple of months depending on your cover ranging from 1 year to 2 years. The amount payable is dependent on the paid premiums.
Things of note when taking out MPPI
Like any other protection cover, you have to fit into a certain criteria to qualify. Some of the qualifications include possessing a job and not being a student. If the cover id sold to someone who cannot make a claim because they do not qualify or did not get the right information, it leads to mis-selling of MPPI. It is also important to note that in normal circumstances MPPI will pay out in claim only a fraction of the total percentage of your income or your mortgage. The cover also has a waiting period from the point the claim matures and payments commence.
Alternatives to PPI mortgage
MPPI can only cover a certain amount of payments for a specific period of time, and not everyone qualifies for it. Thus, it is not the best cover for an extended distress or for some people such as the self-employed. There are other available covers that are more convenient and better placed for different people. For an employed person, employee benefits such as pay without work during an illness or statutory sick pay will cover the mortgage payments. Income protection cover, critical illness insurance and life insurance are other alternatives. These alternatives will cover your mortgage payments and other bills and are usually paid in lump sum amounts. Government help can also be applied as a last resort.
Even though MPPI is a beneficial cushion against many unwanted eventualities, numerous factors must be considered when taking out the cover. This will prevent you from ending up worse than you were before you took out the cover. Furthermore, some options are much cheaper and more beneficial than the MPPI.