Money and renewals

Mortgages: the complete beginner's guide

A beginner's guide to the insurance people take out alongside a mortgage, including mortgage life insurance and mortgage payment protection.

When people talk about mortgage insurance, they usually mean cover that protects a borrower, and their family, if something happens that stops them paying the mortgage. That could be death, illness or a disability that means they can no longer work.

The two main types

Mortgage life insurance

This type of policy is designed to pay off the mortgage if the borrower dies during the mortgage term. The aim is that the borrower's family can stay in the home without having to worry about the mortgage payments.

Mortgage payment protection insurance

This type of policy helps with mortgage payments if the borrower can't work because of illness or disability. The aim is to keep the payments going so the borrower doesn't fall behind on the loan. Policies usually pay for a set period and have conditions about when payments start.

Choosing cover

The level and type of cover depends on the policy chosen and on the borrower's own situation, such as the size of the mortgage, how long is left to run and what other cover or savings they already have. It is worth reading the terms carefully, including what is excluded and how long you would wait before a claim pays out, and comparing policies on the same basis.

Is it compulsory?

Mortgage insurance of this kind isn't required by law. Many borrowers still choose to take it out to protect their home and make sure their family is looked after if the unexpected happens. Lenders will normally require buildings insurance on the property, which is a separate thing.

Where to get help

Kompare doesn't arrange mortgages or mortgage payment protection. For free, impartial guidance on mortgages and protecting your payments, MoneyHelper, the government-backed service, is a good place to start. If you are thinking about life cover, you can read more on our life insurance page.