What insurance do you need for your mortgage?
Updated: 25th Jun, 2024
Author: Charlotte Burton
All lenders will require that you get buildings insurance for a freehold home, and the insurance policy must start on your exchange date.
Some lenders also require you to have taken out life insurance from your completion date as a condition of their loan. Others won’t require it.
Even if your lender doesn't require it, it's a good idea to get some kind of insurance to cover mortgage payments in any future tough times.
Types of insurance for your mortgage to consider
- Life Insurance: This insurance pays out a lump sum in the event of your death during the term of the policy. It can be used to pay off the outstanding mortgage. It's particularly vital if you have a joint mortgage with a partner, as they will become liable for the whole mortgage if you die.
- Critical Illness Cover: This type of insurance provides a lump sum payment if you are diagnosed with a specific critical illness listed in the policy. It can help cover mortgage payments and other expenses during a period of serious health issues.
- Income Protection Insurance: This insurance provides a regular income if you are unable to work due to illness or injury. It can be used to cover mortgage payments and other living expenses until you can return to work.
- Mortgage Payment Protection Insurance (MPPI): MPPI covers your mortgage payments for a specified period if you lose your job or cannot work due to an accident or sickness. It's designed to cover your mortgage payments directly, usually for up to 12 months.
Although not to do with your mortgage, you should also consider getting contents insurance.
🔎 Where to get insurance
If you have a mortgage broker, they may have already spoken to you about insurance. However, it's worth remembering that they will likely get a commission from insurance companies and may not recommend the best deal.
It's worth shopping around to find the best insurance products and deals for your situation. Quotes for the above insurances are available on most of the popular price comparison websites such as:
