Homeowners under-protected by MPPI - says broker

According to research undertaken by Mortgage Talk, the North's leading

mortgage broker within the Legal & General network, only just over one third

(36 per cent) of homeowners have protected their mortgages with payment

protection insurance or critical illness cover.

Mortgage Talk's figures show that 21 per cent of mortgage holders currently

have payment protection insurance, while another four per cent have critical

illness cover. A further 11 per cent have both payment protection insurance

and critical illness cover. Worryingly, however, the statistics also

indicate that another 36 per cent of mortgage holders have no payment

protection insurance or critical illness cover whatsoever.

Mortgage Talk Director Andrew Frankish believes that too many homeowners are

still risking the roof over their head by not properly protecting their

mortgages. 'Figures show that over 90 per cent of people have taken out life

cover purely to protect their mortgages. Despite this fact, and even though

the Mortgage Code requires advisers to discuss the need to protect mortgage

payments against unforeseen events such as serious illness, it is

disappointing that so many homeowners are turning down these sensible

additional precautions,' he states.

'Changes to the rules on state support for homeowners facing difficulties

with their mortgage payments were introduced by the Government in 1995.

Coupled with the establishment of the Sustainable Home Ownership Initiative

by the Council of Mortgage Lenders and the Association of British Insurers

in 1997, these rules brought about a target of 55 per cent of homeowners to

take out insurance to protect their mortgages. Our statistics show that

there is still some way to go before this target is met,' adds Frankish.

'With interest rates now lower than ever, home buyers should take time to

consider proper payment protection as an integral part of their mortgage

planning. After all with mortgages cheaper now than they have been for a

generation, homeowners can afford this protection more than ever,' he

concludes.