info@strattonwm.co.uk

0800 970 8984

Client Login

Why you should review your financial protection when taking out a mortgage

April 25, 2024

Financial protection is often something you’re prompted to think about when buying your first home. It’s an important step to take as you make a large financial commitment. However, it’s just as important to regularly review the level of protection you have. When taking out a new mortgage product, whether it’s your first mortgage, you’re moving home or simply remortgaging, it’s the ideal time to reconsider your financial protection.

A mortgage is one of the largest financial commitments many of us will make, often spanning several decades. Financial protection can help ensure you’re able to meet repayments, even if something unexpected means your income is reduced or stops. Ensuring you have the right level of protection in place for your mortgage and lifestyle can provide peace of mind.

Here are three key reasons why you should review protection when taking out a mortgage.

1. Your outgoings may have changed

Financial protection products are designed to give you peace of mind that you’ll be able to pay for essentials if something unexpected happens. As a result, it’s important to know what your outgoings are to ensure adequate protection. Over time, your outgoings may increase or decrease. If, for example, you’re moving to a larger home that means taking out a larger mortgage, you may find previous protection product no longer provides suitable cover. For first-time buyers, the addition of a mortgage to their regular outgoings may mean they need to consider financial protection for the first time.

2. Your long-term financial commitments may no longer be the same

Over time as your financial commitments change, your protection products should change to reflect this. In some cases, this will mean increasing your level of cover. However, when focusing on mortgages, it can mean decreasing cover too. As you pay off your mortgage, you may find you can reduce your life insurance policy while still benefiting from peace of mind, for example, reducing the premiums you pay too.

3. Your priories may evolve too

Over time, your priorities and concerns are likely to change too. If you’ve welcomed children since taking out a policy or want to start a family in the future, looking at more comprehensive cover can give your family additional security, for instance. This is why financial protection products should be considered alongside your lifestyle plans, including buying a home.

What type of financial protection should you choose?

When taking out a mortgage, life insurance is often considered. While important, it’s not the only protection product that can provide reassurance when you have a mortgage to pay. Here are three options you may want to consider.

  1. Life insurance: When you’re buying a home with a partner, life insurance is a protection product that may be recommended. It would pay out a lump sum on the death of the person or people covered. Usually, a life insurance policy will be linked to the mortgage term and size, to pay off the mortgage if you or your partner passed away. It can relieve one of the biggest outgoings the remaining partner may have, giving them space to grieve without worrying about the mortgage.
  2. Income protection: If you need to take an extended period off work, could you still afford to pay the mortgage? If the answer is ‘no’, it may be worth considering income protection. If you’re unable to work due to illness or an accident, this type of protection product will provide you with a regular income until you’re able to return to work, retire, or the policy term ends. It will pay a portion of your usual salary. It’s a safety net that could help ensure you’re still able to pay for the essentials, from your mortgage to grocery shopping, if something happened.
  3. Critical illness cover: Finally, critical illness cover pays out on the diagnosis of certain illnesses, which are defined in the policy. Rather than paying a regular income, you’d receive a lump sum. This could be used to pay off your mortgage, support day-to-day costs, or make adjustments to your home if necessary. It can give you some freedom by allowing you to reduce or remove expenses, so you to focus on recovery or adjusting.

 

We all think that we won’t need to make use of protection policies. However, the reality is that thousands of Brits make claims every year, providing them with some financial security when the unexpected happens. Despite the peace of mind financial protection can offer, just 15% of people would list life or health insurance as a top-three priority to protect their financial wellbeing, according to research from EY.

If you’d like to discuss financial protection and how it can provide peace of mind when paying a mortgage, please contact us. There is a range of products and providers to choose from, we’re here to help you find the right one for you.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

What our clients say

The people we help are at the heart of what we do. Here are some of their testimonials.

I would highly recommend Darius and John. I’ve used a financial adviser previously and could never get in contact with them when I needed their help. Stratton Wealth Management have been excellent from the start. They are always available to talk, and they also don’t talk in financial jargon!

Dave Rigby -

A client since 2015

Having recently transferred my financial management to Stratton Wealth Management, I have been extremely impressed with the highly professional service I have received. I feel I have been fully involved in all decision making, and the company's highly skilled advisers have shown commitment and patience in any dealings I have had with them. I have also always found them to be easily accessible for any discussion I may require.

Denise Thornton -

A client since 2019

As a business owner and father of four children, finances are usually the last thing we think about. Stratton oversees and manages our finances, both in terms of advice for my business and our personal investments. It is comforting to know that our retirement, investment and life insurance planning has been taken care of. Darius and John are always so efficient in dealing with our affairs. As someone with no real understanding of the ins and outs, it has been fantastic to have experts giving us great advice and making sure our best interests are always the top priority.

Lee and Claire Parkinson -

Clients since 2016

Darius deals with my family’s finances and is a very trusted adviser. We meet a number of times a year, but I know I can call him any time if I have any questions. He is proactive, helpful and friendly!

Jonathan Dennis -

A client since 2019

Darius has been our adviser for a number of years, and when he told us he was starting his own firm, we had no hesitation in moving with him. We had a number of areas that we needed help with, including the complexities around an employee share scheme, investments for us and our new child, in addition to our retirement planning. Darius has continually provided us with a first-rate level of service and we would highly recommend Stratton.

Eamon and Holly O’Hara -

Clients since 2017

I knew I needed to begin saving and planning for the future but didn’t know where to start. Stratton helped me to understand my finances and put together a savings plan that is affordable and works for me. I now have and an ISA and a pension, and whilst retirement is many years away, I have the peace of mind that I am saving for my future. I look forward to working with them for many years to come.

Martin Corrigan -

A client since 2016

I have been impressed with the advice and service provided by Stratton Wealth Management and have always found Darius to be approachable, dependable and highly professional in his approach. It is reassuring to be able to have such a high level of confidence and trust when it comes to financial advice.

Russell Jones -

A client since 2018

Many thanks indeed for your in depth report for my client Mrs H – it is most thorough and above all readable. This might sound particularly strange; however you may well gather that in my profession we see many such reports, and I often feel that if the adviser fills it with charts and graphs it evidences a level of research. In truth most of what is produced is readily obtainable from the internet.

I would like to thank you (and your organisation) for your prompt and professional attention to my requirements on behalf of my client. As a practice we shall definitely be putting Stratton Wealth Management on our “preferred supplier list".

Colin Dunstall, Donaldson Dunstall Solicitors -

A client since 2015