• Insurance Intro
• Mortgage Payment Protection Insurance
• Mortgage Life Insurance
• Building & Contents Insurance

Insurance Intro
Insurance, yawn. I know, not the most stimulating of subjects, but oh so important. If you read our Co-Buying page you'll have seen that Insurance was one of our top 3 essential things to get right for a happy successful co-buyer relationship, so please do have a look through this page to make sure that you too are protected from the mishaps of Murphy's Law.

Consider what sort of a predicament you'd be in if you or anyone you bought a home with lost their job, became too ill to work, or heaven forbid died. Buying with someone else has all the financial advantages of being able to afford somewhere bigger, better and sooner than you could alone, but you also take onboard more responsibilities. All those on the mortgage of a property have a responsibility to pay the WHOLE mortgage. It's called being 'jointly and severally liable', and in practical terms it means that your mortgage lender doesn't give a pair of dingo's kidneys whether you're paying 40% of the mortgage costs each month and Jenny's paying the other 60%. If Jenny looses her job or cannot afford to pay they will come to you for the whole amount. I see that I'm starting to get your attention now. These is however a solution that will enable you to sleep easier at night and that's MPPI.

Mortgage Payment Protection Insurance (MPPI)
This is an insurance that each co-buyer should contribute to so it covers all of you. It is important that you speak to your insurance company or broker about the specifics of your policy, but this insurance should cover a percentage (sometimes that's 100%) of your mortgage payments (or the mortgage payment of your co-buyers) should you loose your job, be too ill to work, or heaven forbid die.

Any financial advisor or mortgage broker should be able to help you with advice or direct you to someone who can. These policies are not expensive at all, and they are so important to have. Covering yourself and one another against the unforeseen occurring is just sensible and is the best form of mutual respect.

When you take out this kind of insurance you will find that in most cases there needs to be a reasonable period of time between taking out the policy and claiming on it. Also if the reason for the claim is because of illness then there is usually a deferral period of 30 to 60 days before it will kick in to help with your mortgage payments. Once again this will differ by policy, so you must check with your insurer what you are covered for and when you are covered.

Mortgage Life Insurance
Some mortgage lenders insist on this insurance being taken out or being in place before lending to you, whilst others don't. Check which yours is before you borrow from them. This insurance covers you if you die before the end of the mortgage term. The insurer will then pay the lender the remainder of your debt on the loan so your family does not get stuck with the bill.

Building & Contents Insurance
Most people know what these are. They protect your home and it's contents from all sorts of nasty things happening to them. Your Buildings Insurance should cover you in case of:
+ Fire and smoke damage
+ Burst pipes and water damage
+ Flooding and storm damage
+ Vandalism
+ Subsidence, movement or slippage

Your Contents Insurance should cover you for very similar events, but it is the items inside your home instead of the home itself that are covered. Your TV, three piece suite, clothes, jewelry, etc. Some policies are 'like for like' policies so if you've an old TV that gets stolen the insurance company will replace it with something of the same value. Whereas other policies are 'new for old' where your TV will be replaced with a brand new one. These policies are of course slightly more expensive.

Some policies cover items away from the home, others do not. Some cover all items of a particular category (such as jewelry) to a maximum total value no matter how much you loose, and others require you to specify items over a certain value or they are not covered. Every policy is different so it is important to check the specifics from your insurer. Never 'assume' that things are covered always check.

If you are co-buying with others it is even more important that you get these insurances and check that you are covered. Most insurers need you to name all people you're not related to who live in the property, and of course you will all be equally responsible for the security of the home, but getting insurance together will undoubtedly be cheaper than getting it on your own.