UK Mortgage Payment Protection Insurance

Mortgage Borrowers are advised to avoid the protection racket when
buying mortgage insurance

A new survey by The British Association for Protection Brokers (BAPB) reveals that mortgage borrowers are being ripped off by their lenders and are paying hundreds of thousands of pounds over the odds for their Mortgage Insurance. In fact, in the first year alone the average mortgage borrower can save over £219 by switching to an independent provider such as BAPB.

Saving Money on Mortgage Insurance

Commenting upon this research BAPB Director General, Daniel Rothschild says, "Lenders are profiteering at the expense of their borrowers! We all obtain mortgage insurance from the same source, the only difference is that we, together with other independent brokers, retain less commission and so are able to purchase more benefits for our clients whilst maintaining comparity of cost."

A view shared by another BAPB Director, Richard Longfellow who says, "Just because a Mortgage Payment Protection Insurance is one of the most expensive, it doesn’t mean one is getting a better level of cover – in fact, the only difference is 99% of cases is how much commission goes into the provider’s pocket".

Mortgage Lenders are taking advantage of consumer’s ignorance that they can shop around for a better insurance deal. Mortgage Insurance is just one of several insurance policies sold by lenders which analysts say can be overpriced. Many borrowers are also paying too much for home-contents and buildings insurance sold by their lenders.

The cost of Mortgage Payment Protection Insurance for the UK’s top ten providers is detailed below:

Accordingly to protect an average mortgage of £650 per month will cost £37.57:
(£650 x £5.78 ÷ 100 = £37.57)

This compares with the cost from BAPB of only £3.95 or a monthly cost of £25.68:
(£650 x £3.95 ÷ 100 = £25.68)

Over the first 12-month period this represents a total saving of £219.72:
(£37.57 - £25.68 = £11.98 x 9 = £107.01 + £112.71 = £219.72)

In one year alone, the total cost saving in the UK would be £481.8 million

(The current number of UK MPPI policies is 2,200,00 x average saving of £219 = £487.8 million)