Should this less favourable scheme come into play in 2015 as anticipated, brokers and advisers will need to step up and ensure their clients’ most valuable asset is still protected.
Geoff Hall, Managing Director at Berkeley Alexander explains:
“Currently unemployed homeowners can claim for support for mortgage interest payments to assist them in paying their mortgage if they are already receiving job seekers allowance and other income related benefits. According to data recently published by This is Money, in 2013 alone, 239,000 people successfully claimed for this scheme and the Government paid out £400 million in support payments. Should the current review lead to a change in legislation, whereby the scheme becomes a loan system with interest charged and the taxpayer essentially taking a stake in the property then this is a huge amount of people, already in hardship, that could find themselves plunged even further into debt and facing the devastating consequence of losing their home.”
With unemployment figures still high in the UK, the effects of economic recovery slow to filter down to the man on the street and major Government overhauls such as this set to come into effect, it is important that brokers and mortgage advisors speak to their clients about the importance of Mortgage Payment Protection Insurance and Short Term Income Protection should the worst happen.
Geoff continues:
“Unfortunately, brokers & advisers are still wary of offering MPPI and STIP cover because of increased regulation over the last two years and the perceived negative image of PPI insurance. However we have seen a step change in the attitude of the consumer press recently with a number of commentators and journalists publishing articles on the virtues of MPPI and STIP. They are vital protection products that provide clients with the critical cover they need to keep a roof over their heads should they find themselves unemployed or forced to leave the workplace due to accident or illness. Indeed, should the Government’s proposals to reduce the benefits of the current scheme come into place in 2015 as anticipated, those 239,000 people would have found themselves in a difficult situation of having to find ways to make their mortgage payments or the interest on support received.”
“The cost of homeowner ASU has often made it hard for advisers to sell these policies but there are solutions out there. In light of these potential changes in legislation, I urge advisers to speak to their clients today about the benefits of homeowner protection insurance, and how it could offer them the lifeline they need to pay their mortgage and bills if unable to work.”
