New government mortgage protection should see an increase in Life Insurance
Today has seen an announcement by the government that they intend to spend a billion pounds trying to kick start the housing market, with the introduction of government protected 95% mortgages. Lenders will be encouraged to offer mortgages of up to 95% of the home’s value, with the government guaranteeing a percentage of the mortgage so that if the customer does fail to repay their mortgage, the lender is not left with toxic debt, like the problem before the credit crunch.
This should see more and more people able to afford to make it onto the first rung of the housing ladder, the place where they will also traditionally take out their first life insurance policy. Life insurance is one of the most important forms of insurance you’ll ever take out, but has seen a fall in recent years as less and less people have been able to buy a new home.
Life insurance fits in very well with buying a home as the payout from a life insurance policy is predominantly used to help pay off the remainder of a mortgage. If a customer was to buy a house for £200,000, and to take out a £180,000 mortgage, they would also take out a life insurance policy at the same time of at least £180,000.
If they were to then suddenly die a few years into paying their mortgage, they’d at least leave behind enough money to their family to pay off the mortgage in full, guaranteeing them somewhere to live.
Customers who are still not able to afford to make their way onto the housing ladder, but who can afford to rent their own home should also consider a life insurance policy, especially if they are in a long term relationship and have, or are planning a family. The younger you buy life insurance, the cheaper it is, and you can also protect your family in the same way if you don’t own a home, as the money you leave behind can be used to pay rent or buy a home for the rest of their lives.