You are here: Home - Remortgage - Guides -

Guide to Mortgage Payment Protection Insurance

Written by:
Mortgage Payment Protection Insurance (MPPI) covers your mortgage payments in the event of your being unable to work due to an accident, sickness or unemployment, so it is also known as ASU.
Guide to Mortgage Payment Protection Insurance



MPPI covers a combination of insurances. You may simply want the unemployment cover for your mortgage if you already have accident and sickness insurance at work, for example.


While about 60% of new mortgage borrowers take out MPPI, only one-third of all borrowers have this insurance. This may simply be because the cover is not particularly cheap – many lenders charge around £5 per £100 of mortgage payment you wish to insure each month. But note that you may be able to find cheaper MPPI if you shop around. And some mortgage deals come with free MPPI, either for six months or a year.


Note that if you remortgage at any point and increase the size of your mortgage, you will also need to increase the level of MPPI cover.


You can take out mortgage payment protection insurance direct over the internet, but some financial advisers claim they can offer this insurance more cheaply because of their bulk-buying arrangements. Some mortgage deals come with free MPPI for the first six months or the first year, but you must remember to renew the policy or take out another one at the end of the free period.


State help with your mortgage payments


In January 2009, the Government introduced a temporary measure that reduced the time you have to wait for state benefits to cover your monthly mortgage interest, known as Support for Mortgage Interest (SMI). In the past this was nine months, but it has been slashed to 13 weeks.


Nevertheless, there are rules for eligibility (an upper limit of £200,000 and SMI only pays mortgage interest up to a rate of 3.63%) and you will be means-tested (you can’t work for more than 16 hours a week and have more than £16,000 in savings).So, if you have a partner who earns enough to cover the mortgage interest or you have savings, you will not be entitled to state help. Also, this help will not be available if you have a mortgage protection policy in place which would do a similar job.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Six bank statement mistakes that can ruin a mortgage application

Being overdrawn and having a history of payday loans can be red flags to lenders when they...
Six bank statement mistakes that can ruin a mortgage application

One in seven landlords unaware of looming energy-efficiency rules

Landlords risk their properties becoming unrentable if they don't meet the required standa...
One in seven landlords unaware of looming energy-efficiency rules

Revealed: The winners of the Your Mortgage Awards 2020/21

Find out which mortgage lenders offer the best products and services in a highly competiti...
Revealed: The winners of the Your Mortgage Awards 2020/21

Guide to borrowing past retirement age

As an older borrower, you may be concerned that a lender will not offer you a mortgage pas...

Mortgage market biased against homeowners

Buy-to-let property investors are unfairly favoured in the mortgage market, an independent...

Should buy-to-let investors ‘go Dutch’?

The Netherlands is revealed as Europe’s top buy-to-let property hotspot

Private sector tenants in poverty double in decade

The number of private rented sector tenants in poverty has doubled in the last decade from...

Large mortgage broker firm launches with fees of over 1%

An insurance firm has launched a mortgage advice service

Second steppers targeting detached properties

Those living in their first home are increasingly looking to reduce the steps to their lon...

Mortgage Calculators