Jump to content
House Price Crash Forum
athom

When The Mortgage Insurance Runs Out.....

Recommended Posts

The talk of redundancies got me wondering about mortgage insurance.

Anyone know what percentage of people have it? Was it widely compulsory with the riskier mortgages?

Anyone know what range of periods they usually cover? From friends with it i'm told it usually pays out for a year.

That would explain the relative calm in the market right now. Grim reaper should start hitting the market soon though as there is no way the jobs market is on the mend.

Share this post


Link to post
Share on other sites

It's not a question of how many have it, the real question is how many have that have it will actually pay out on claiming. This is far more important.

Also the question of can the insurance companies take that sort of a hit.

The floor is open for discussion.

Share this post


Link to post
Share on other sites
It's not a question of how many have it, the real question is how many have that have it will actually pay out on claiming. This is far more important.

Also the question of can the insurance companies take that sort of a hit.

That's a very good point. I can picture gordon jumping in to bail them out though if they can't. Yet more prudent peoples money funding the feckless home "owner".

One friend of mine seems to use his insurance to top up his self employed earnings, if he doesn't get much work that month or can't be bothered to do any he just claims. I suspect he's had his money back by now and then some. They seem quite happy to pay out so far.

But if they pay or not still it doesn't last very long, if the prospects of getting another job are so poor are we going to see a lot more repos coming in a delayed wave 1 year after the redundancies? Seems highly likely and could account for some of this period of calm we're seeing now.

Share this post


Link to post
Share on other sites

A very quick survey suggests that if (big if) they pay out, while you're unemployed you get payouts for 12 months or 24 months, depending on the policy. After that - *shrugs*

Share this post


Link to post
Share on other sites
Delaying the inevitable imo ......

Totally agree. Not speaking for all of them, but the one that was offered to me way back was contingent upon me being unemployed for 6 months and then only paid for a maximum of 12 months. Something like that... please don't shoot me down on a few technicalities. Point being, it worked out to a be a minute lifeline at best.

Share this post


Link to post
Share on other sites
Totally agree. Not speaking for all of them, but the one that was offered to me way back was contingent upon me being unemployed for 6 months and then only paid for a maximum of 12 months. Something like that... please don't shoot me down on a few technicalities. Point being, it worked out to a be a minute lifeline at best.

Sounds a bit rubbish. You had to be unemployed 6 months before they'd pay anything? What if you had nothing to keep it up for 6 months?

Share this post


Link to post
Share on other sites

The insurance I am thinking about insures the lender for their possible loss not the borrower, but the borrower pays for it...hey ho,no such thing as a free lunch. ;)

Share this post


Link to post
Share on other sites

Hitachi Capital recently gave me 60 days notice that they were cancelling my cover ... they are pulling out of the UK market.

I won't take insurance out elsewhere as premiums have gone up >200% from when I took the original policy out and I'm ~18months "ahead" in my mortgage repayments which is probably the best insurance I can have.

Share this post


Link to post
Share on other sites
Sounds a bit rubbish. You had to be unemployed 6 months before they'd pay anything? What if you had nothing to keep it up for 6 months?

Most people have enough set aside to cover 6 months of mortgage payments - if not they're pretty insane. When I was looking into if it was worth while I believe you could get quicker payouts but the premium often went up.

The thing I found was that due to the terms and conditions the chances of the insurance actually paying out at all was remote. You had to be made redundant - so doesn't cover part time hours, pay cuts etc. You also had to demonstrate to them you were looking - normally by providing proof you'd signed on - for it to pay out. If you refused a job even if that job wouldn't cover the mortgage - it wouldn't pay out. There were so many 'out's for the insurance company that it all seemed rather pointless.

Share this post


Link to post
Share on other sites
They factored my notice period in.

And if you turned up at work one day and found the lights out and the locks changed?

Since reading on this forum house buying just isn't seeming worth it unless for cash.

Share this post


Link to post
Share on other sites

It's going to be like car insurance, as soon as enough claim the insurance companies will be looking to get out of paying.

Anyone know what sort of claim numbers the insurance companies factored into their models?

Can they sustain a claim rate of 5% of policy holders or would that be too high?

Share this post


Link to post
Share on other sites
Hitachi Capital recently gave me 60 days notice that they were cancelling my cover ... they are pulling out of the UK market.

This is a perfect demonstration of why the insurance is useless ... they're not even waiting for it to start raining before taking their umbrella away, they're doing so because the forecast looks unsettled! In the meantime they were more than happy to take your premiums while the sun was shining.

Insurance fraud, IMO.

Share this post


Link to post
Share on other sites

I haven’t got a link for this yet but I do remember reading that about 33% of new purchasers took mortgage payment protection out.

Very few of the "self cert" people will be able to claim off their policies and probably shouldn’t have been sold them in the first place. So out of the 33% who hold policies a proportion of these are already dead policies. All claiments have to show proof of the previous income stated and redunancy/ business failure.

As stated above most policies start 30, 60 or 180 days after unemployment starts and most only payout for 12 months.

When money gets tight in a household these are the first DD's to be cancelled.

My understanding of the insurance market would be that a 5% claim rate would be a disaster for the insurer.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   291 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.