Bridge your client's info gap to bridge your income gap
April 2010
According to the homeless charity Shelter, at some stage 6.1 million people have resorted to borrowing on a credit card to help pay their housing costs and nearly one million people are currently paying their mortgage on credit cards1. This is shocking and needless since this could easily be avoided if homeowners better understood the benefits of having Mortgage Payment Protection Insurance in place.
Yet it would seem that homebuyers are blinkered by how much they can borrow for a mortgage and what they need for a deposit rather than thinking about the additional costs involved and how they might cope down the line if their circumstances change. It is perplexing why any home-owner would want to make potentially their biggest financial investment, without knowing how to mitigate against any future change in circumstances that might impact on their ability to meet their repayments.
Research by financial website Unbiased.co.uk has revealed 24% of home buyers have a distinct lack of knowledge when it comes to the additional costs that go into buying a home, beyond the deposit and mortgage. One in 10 house buyers estimate the extra house-buying costs won't exceed £1,000, when in reality the conveyancing fees alone could cost this much. Furthermore, 4% admit it never even occurred to them there are any additional costs2. This leaves other essential costs such as the survey, solicitor fees, and even Stamp Duty tax are not always sufficiently accounted for let alone MPPI.
Brokers are the industry's interface with the consumer and as such have the opportunity to fill this information gap by instilling a dose of reality in the house-buying process and presenting the pitfalls as well as the pleasures of home ownership to their clients. Too often the prospective purchaser is so bound up in the process of moving into a new home that they fail to take into account other essential elements. One of these elements must include insurance should the borrower be unable to make their mortgage repayments because of accident, sickness or unemployment.
The golden years of plentiful mortgage products and seemingly in-exhaustible supply of prospective home buyers are behind us and intermediaries looking elsewhere to make up the deficit caused by the stagnation in the mortgage market are seeing the sales of MPPI to new and existing clients as a relatively easy way to bridge any income shortfall and provide a valuable service to their clients at the same time.
As an industry, we should aim to make buying insurance to keep the roof over your head as part of buying a house as arranging car insurance is to buying a car. Hopefully, purchasing MPPI to ensure your home is protected will then become as natural and generally accepted as wearing a seat belt when driving or not smoking in a public place and the intermediaries should be ramming this message home to clients.
Paymentshield offer two great Mortgage Payment Protection Insurance (MPPI) products: MortgageProtector, for new and re-mortgaging customers underwritten by Aviva Insurance Ltd; and MortgageProtector Solo, for existing mortgage borrowers underwritten by Pinnacle Insurance plc. Both our products are designed with a range of flexible features so you can tailor your MPPI to match your individual needs and budget.
For more information on selling Paymentshield's MortgageProtector and MortgageProtector Solo products, please contact our Intermediary Sales Team on 08450 615 700.
1 www.guardian.co.uk, Housing crisis forces couples to postpone having babies 4th April 2010.
2 Mortgage Solutions "Quarter of customers clueless over homebuying costs" 07 Apr 2010.
If you would like to talk more information, please call our Broker Support Team on:
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