A mortgage is the biggest debt most people will take on in their lives. It’s a big financial commitment over a long period of time, so it’s important to protect it – but lots of people simply don’t get round to it.
If you’ve got a mortgage, being able to keep up with your monthly repayments is essential. For this you need an income – so what happens if you lose yours? If a long-term illness or injury stopped you being able to earn, this debt could quickly become a big financial burden. But there are ways to protect yourself.
Why protect your mortgage?
A mortgage is a significant, long-term monthly outgoing. When we take one out, we do so assuming we’ll always have an income and we’ll always be able to pay it.
But what happens if you lose your income because of your health? If you still can’t work after your sick pay runs out, what’s your backup plan? You might be okay for a month or two, but after that it’s usually a case of digging into savings or borrowing money. Or, worse still, falling behind on your mortgage payments.
Protecting your income means protecting your ability to pay the mortgage.
Protecting your income means protecting your ability to pay the mortgage. It gives you peace of mind that you’ll always have your home, whatever happens to your health. It also keeps your savings intact and means not having to take on more debt.
Why do it with income protection?
Income protection is a good way to protect your mortgage because it pays out monthly if you need to claim. This means it’s ideal for making sure your monthly outgoings are paid.
Insurers will usually cover up to 60% of your income, which should be enough to cover the mortgage and other essentials every month. This comprehensive level of cover would be difficult to achieve by any other means, like savings.
The other thing about income protection is that covers you for any medical reason, if you’re signed off work. So whatever happens to your physical or mental health, you know your mortgage won’t be at risk. Peace of mind while you get back on your feet.
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Almost 50% of UK adults will be unable to work for 2+ months
We have a habit of thinking it won’t happen to us, but illness and injury can happen to anyone, anytime. It’s best to get a backup plan in place before it happens to you. People who have income protection tend to use it for things like:
- Musculoskeletal injuries or conditions – like broken bones or back pain
- Mental health conditions – like stress, anxiety or depression
- Serious illnesses – like a stroke or cancer
For someone of working age, becoming unable to work for health reasons like these is much more likely than dying – yet far fewer people protect themselves against this scenario. Here’s an idea of how many people will be unable to work for 2+ months for health reasons before they retired at 68:
Source: LV= Risk Reality Calculator
How Anorak helps homeowners
Owning your home is great, but it’s a big financial liability. How would you pay the mortgage if you lost your income? What happens to your mortgage and your home if you die? These are the kinds of scenarios we help people think about.
We do this using our online tool, which provides free, independent advice and makes it easy to buy the right cover – without any guesswork. We ask a few quick questions about your life and finances, then use what you tell us to calculate the right cover for you. Then we match you to the most suitable policies from the whole market of insurers.
Want to be confident that you’ll always be able to pay the mortgage, whatever your health throws at you? Learn what income protection insurance is right for you.
This guide is intended for informative purposes only and doesn't constitute advice.