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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 6th April 2021*

Customers often contact us wanting to know, “Does mortgage protection cover redundancy?” The answer is yes, you can get protection to cover your mortgage in case of redundancy, though the policy will depend on what you want covered and your personal circumstances.

Mortgage payment protection insurance (MPPI) is commonly referred to as either mortgage cover for redundancy, mortgage redundancy insurance, or mortgage redundancy protection, and can help you with your monthly repayments if you lose your job, or in certain other circumstances where you’re unable to work.

If you feel you may be at risk of facing redundancy after the mortgage application, or you want the peace of mind that your home is protected from unforeseen circumstances, taking out a mortgage redundancy protection insurance policy could be the way forward.

In this article we look at the following:

For more information on MPPI, call us on 0808 189 2301 or make an enquiry and we’ll pass your enquiry on to a specialist. In the meantime, take a read of this guide for all you need to know about mortgage payment protection redundancy cover.

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What’s included in mortgage protection insurance redundancy cover?

There are several different types of MPPI available, so what is covered will depend on the product you choose. The types are “unemployment only”, “accident and sickness only” and “accident, sickness and unemployment”.

As the name suggests, “unemployment only” will just give you mortgage protection against redundancy. “Accident and sickness” will protect you against accidental injury or long-term illness which prevents you from working. “Accident, sickness and unemployment” will cover you for all three.

So, if you’re just looking for mortgage protection for redundancy, opt for “unemployment only”.

Is mortgage protection for voluntary redundancy covered?

While policies will vary by provider, many insurers will not pay out if you take voluntary redundancy. One of the reasons for this is that voluntary redundancy payouts tend to be considerably higher than involuntary redundancies.

Always check the terms and conditions before taking out mortgage insurance redundancy protection, to see in what circumstances you’d qualify for a payout.

How much does mortgage protection with redundancy cover cost?

The price of your MPPI policy will vary depending on which type of cover you choose. “Accident, sickness and unemployment” is understandably more expensive than “accident and injury only” or “unemployment only”.

There are also other factors that will play a role, including your age and the cost of your mortgage repayments.

To find out how much you can expect mortgage protection insurance for redundancy to set you back a month, contact us. We’ll then put in touch with an advisor who will generate accurate quotes tailored to your individual circumstances.

What payout can I expect from mortgage cover if I’m made redundant?

The amount your insurer will pay will depend on the type of cover you’ve selected. Most providers will allow you to claim up to 125% of your mortgage, as a contribution to associated costs such as energy bills and council tax.

There are caps in place. The majority of MPPI policies will not pay out any more than £2,000 per month or around 65% of your monthly income⁠, whichever is the cheapest.

The maximum time you can expect your payments to be covered is two years, although some only cover one year. If you’re a sensible saver and have emergency funds available, redundancy protection for your mortgage may not be necessary.

When will my mortgage redundancy protection policy payout?

Each MPPI policy comes with an excess period, so you should also have the option to add “back to day one cover”.

The excess period is how long you have to wait before you receive your first payment. This typically ranges between 30 and 90 days. So, if you have a 30 day excess period, you can expect to start receiving your monthly payments 30 days after your claim is submitted.

“Back to day one” policies backdate your payments from the day the cover started. So, a “back to day one policy” with a 60 day excess period means you would receive two monthly payments after this time.

It’s usually a good idea to have a minimum of two months’ worth of mortgage payments in savings to ensure you’re covered for any downtime.

Which providers offer redundancy insurance mortgage protection?

There are a number of insurers who offer MPPI, ranging from high street banks and building societies to more niche independent providers.

Mortgage redundancy cover Halifax

For example, both Halifax and Lloyds Bank offer mortgage redundancy cover but restrict this to cases of involuntary employment only.

Speak to an expert about mortgage protection insurance against redundancy

If you have any more questions surrounding redundancy cover on a mortgage or want advice as to whether it’s a suitable product for you, don’t hesitate to get in touch.

We work with a team of whole-of-market experts, some of whom have specialist knowledge in mortgage payment protection insurance products. They can give you advice bespoke to your needs, and seek out the best quotes and most suitable providers on the market.

Submit an enquiry or give us a call on 0808 189 2301. We don’t charge a fee, and there’s absolutely no obligation on your part.

Updated: 6th April 2021
OnlineMortgageAdvisor 2021 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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