A recent article in the press announced that house repossessions are up 79% on last years figures. This is a very worrying statistic.

Lenders have to follow a fairly strict code of conduct when it comes to taking possession of a property under the MCOB (mortgage conduct of business rules) and they have to demonstrate that they Treat their Customers Fairly “TCF”. This is all very good; however its just more lip service to paper.

In effect, if you do not make your monthly mortgage repayment, the lender simply has to show that they have written to you a few times, told you the consequence of not paying and given you a chance to pay or demonstrate that you have the means settle any arrears within a reasonable timeframe.

Lenders are not charities, and if the courts were that sympathetic to non payers, allowing ridiculous underpayments or extensions to the term of the loan; the lenders would simply not lend.

There are three main causes of repossessions:

Relationship breakdown
Inability to work due to accident and sickness
Redundancy

Well, relationship breakdowns have not increased significantly enough to cause a 79% increase in repossessions; that would simply be ridiculous.

Has the incidence of morbidity increased that much? No, although a serious cause of repossession, figures remain largely static.

The answer is obvious, the downturn in the economy. So what can you do to protect yourself?

The answer is simple, for less the cost of the average monthly satellite TV subscription, you can purchase an MPPI policy (Mortgage Payment Protection insurance Policy).

Mortgage Payment Protection Policies, will meet the monthly cost of your mortgage (some will give you money on top, to cover insurance policies etc), for up to 12 months, should you be unable to work through Accident, Sickness or Redundancy.

If you have a mortgage outstanding, no doubt meeting the monthly cost is one of your top family priorities. After all, it provides you with security and the roof over your head. Unfortunately, as you have seen in the news, the economy is on a poor footing at the moment, and no doubt heading for a recession.

Recession means job losses, which translates into repossessions. It is a fact of life.

However, the good news is that should you lose your job, you can avoid throwing yourself at the mercy of the state.

Mortgage Payment Protection Insurance or MPPI as it is known to the industry is still available. It is designed to insure against the financial consequences of a mortgage payer losing his or her income, through no fault of their own.

When looking for a policy, do check to make sure that you are eligible and of course, if you are aware for whatever reason that redundancy is on the cards, the policy will not pay out.

Your bank, and of course your existing lender want to offer these policies to you at an inflated cost, and quite often with inferior benefits to those that are available elsewhere. Well, they have got to put some money back in their coffers somehow…make sure that it is not your money!

A good MPPI policy should allow you the time to find a job or set up a business, knowing that your home at least is safe. Typically you will receive benefits for 12 months until you find new employment, or start trading, (whichever is the sooner). Often, there is a clause that states that they will not pay out during the first 90 days of cover. This is to make sure that the insurer is not being selected against i.e. you knew that you were going to be made redundant.

Some providers will offer the additional benefit of “back to day one cover” i.e. they will back date your claim to the first day of unemployment or incapacity. This should stop you losing out financially.

If you are finding things tough financially at the moment, chances are that you have not had the resources to have put aside an emergency fund to cover a period of redundancy.

Well Mortgage Payment Protection Insurance, is probably right for you; but remember, if you really can’t afford the premium to cover all of your monthly mortgage costs, something is better than nothing at all. You can easily elect to cover part of the monthly cost.

MPPI, can you afford to be without it?