What is mortgage income protection?

There’s actually no specific product called mortgage income protection, what this refers to is an income protection policy that’s used to help cover mortgage payments if you were unable to earn your usual income due to illness or injury.

Mortgage income protection can often be confused with mortgage payment protection insurance (MMPI).

Both of these policies offer financial protection to cover your mortgage, but they do so in different ways.

Mortgage payment protection insurance is a policy taken out with its sole purpose being to protect your mortgage. This is not something currently offered by Reassured or Reassured Advice.

Whereas income protection can be used to cover any financial obligations you have, including your mortgage.

But just how can income protection help to cover your mortgage? Keep reading this article to find out everything you need to know…

Compare income protection quotes with Reassured Advice

By comparing quotes you can find the most cost-effective income protection policy to protect your mortgage, (as well as many other essential costs).

Why not let Reassured Advice do this on your behalf?

Not only can Reassure Advice compare quotes from all of the UK’s major providers, but also smaller specialists, to help you secure the best available deal.

What’s more, Reassured Advice are FCA regulated and don’t charge a fee for their quotes.

How does mortgage income protection work?

Mortgage income protection is simply an income protection policy that’s used to cover your monthly mortgage repayments in the event you can’t work due to accident or sickness.

As income protection payments can be up to 70% of your usual income, it’s possible to use your payments to cover your monthly mortgage instalments.

In terms of how an income protection policy works to protect a mortgage, it can be as simple as:

  1. Develop an illness or injury
  2. Make claim
  3. Wait for your deferred period
  4. Receive payments
  5. Use to cover mortgage repayments

Unlike other financial protection policies (like MPPI), income protection isn’t tied to a specific financial obligation, which allows you to use the payments however you see fit.

If there’s any funds left over after your mortgage payment has been made each month, you could also use the money to cover other essential costs such as:

  • Loans or credit card payments
  • Food shop
  • Childcare costs
  • Transportation costs
  • Bills and utilities

You could also use your payments to cover leisure costs too, such as a gym membership or Netflix or Spotify memberships if you’d struggle to continue paying for these without your usual income.

Reassured Advice can take you through the whole application process and answer any questions you may have about protecting your mortgage with income protection, a friendly member of the team is ready and waiting to help so why not get in touch?

Do I need income protection for a mortgage?

If you feel you’d struggle to continue making mortgage payments if you were unable to work for a long period of time, income protection could be very beneficial.

It’s not a legal requirement to have income protection to cover your mortgage so whether you need it will ultimately depend on your personal circumstances.

If you have other forms of financial protection (such as critical illness cover), have other sources of income and/or have a substantial amount of personal savings, you may be able to rely on these to help cover your monthly mortgage payments while you’re unable to work.

However, when looking to protect your mortgage, you may need to consider:

  • Are you self-employed?
    As a self-employed worker, you won’t benefit from receiving sick pay from an employer, meaning you’ll likely have to cover your mortgage payments completely out of your own pocket. If doing this over a long period of time, while being out of work, it could cause great financial strain
  • Do you receive sick pay?
    Sick pay could help to ease some financial stress while you’re unable to work. However, Statutory Sick Pay in the UK currently stands at £96.35 per week, roughly totally £385.40 a month. To put this into perspective, in 2018, the average monthly mortgage repayment was £723[1] - meaning sick pay alone is unlikely to be sufficient in covering your mortgage and you may require some additional support
  • Do you have savings?
    If you have your own savings you could rely on this to help cover mortgage payments. However, it’s likely you’d need a substantial amount to keep this going over time. This also won’t be a convenient option for most as it’s likely the money in savings was intended for something else

For these reasons, income protection is especially beneficial to those who’re self-employed, those who don’t receive full sick pay (or those who’d rely on sick pay alone) and those with limited savings.

Why not contact Reassured Advice? Their team of experts can take your unique circumstances into consideration and offer guidance on what financial protection will suit your needs.

How much income protection insurance do you need?

Enter your monthly financial commitments to understand the level of income protection cover you require.

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£723 a month is the average monthly mortgage payment in the UK, with the average monthly rental price coming in at £700.

The majority of our monthly income will go towards rental or mortgage payments.

For this reason, it’s essential to have precautions in place to ensure you could keep up to date with your payments if you weren’t receiving your usual income.

Monthly income protection payments can help to cover this large expense and ensure you can stay in your home.

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According to the Money Advice Service, the average household spends £340 a month on household bills.

This includes electricity, gas, TV and broadband.

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Childcare costs are on the rise with it now costing £137.69 per week for part-time nursery for a child under the age of two.

That’s over £550 per month - is this an amount you’d be able to keep up with if you were unable to work?

Becoming ill could also result in the need for additional childcare while you attend doctors’ appointments or medical treatment.

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The average household in the UK spends around £97 a week on their food shop, totaling £388 a month.

While this may seem like a small amount in comparison to some of the other expenses mentioned, the food shop is often where we try to scrimp and save when we fall on hard times.

Income protection can take care of the cost of your weekly food shop, as well as many other essential costs.

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At the beginning of 2020, credit card debt in the UK was at £2.1 billion, with almost 27 million UK residents in some kind of debt.

Becoming unable to work could make it hard to keep up with credit card or loan payments (including car finance or other financed goods).

Failure to keep up with payments could result in additional interest being incurred or late fees issues - resulting in a higher total needing to be paid.

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The average spent on public transport each month comes to an average of £94.

This includes the cost of public transport, as well as petrol and diesel vehicles.

While this amount may reduce while you’re unable to work as you won’t need to commute there may be additional spending on public transportation if your illness or injury leaves you unable to drive.

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Your total cover estimate

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Let us find your best quotes.

What’s the best mortgage income protection?

The best income protection to cover your mortgage will be the policy that offers the protection you need at the most cost-effective price.

When taking out income protection, you have the flexibility to choose:

  • The length of your policy (how long your policy will last)
  • Definition of incapacity (what you’re covered for)
  • Payment period (how long you’ll receive payments for)
  • Deferred (or waiting) period (the time before your payments commence)

By tailoring these aspects towards your needs, you can ensure you’ve secured a policy that’s well suited to protecting your mortgage.

For example, you may choose to have your policy length or payment period mirror your mortgage term to ensure you’re fully protected throughout this time.

Comparing quotes will allow you to find the most favourable price on a policy that meets all of your needs - why not let Reassured Advice do this on your behalf?

How much does mortgage income protection cost?

How much you’ll pay for mortgage income protection will vary from person to person.

This is because providers will take into consideration personal factors, as well as factors about your policy when calculating your income protection premium.

Personal factors:

  • Age
  • Health and wellbeing
  • Smoking status
  • Occupation

Policy factors:

  • Level of cover
  • Policy type
  • Definition of incapacity
  • Payment period
  • Deferred period
  • Premium payment type

It can be possible to take out income protection policy from just £5-a-month through Reassured Advice.


The table below shows the age breakdown and the benefit amount you could receive for a premium of £5 a month:

Age Monthly pay out amount Deferred period Premium payment terms
30 £1,530 3 months Reviewable and age banded
35 £1,182 3 months Reviewable and age banded
40 £875 3 months Reviewable and age banded
45 £604 3 months Reviewable and age banded
50 £396 3 months Reviewable and age banded
55 £270 3 months Reviewable and age banded

Income protection quotes are subject to individual occupation and medical underwriting so may vary slightly from the price shown

By comparing income protection quotes through Reassured Advice you can compare multiple quotes from the UK’s major providers, as well as smaller specialists, so you can ensure you’re getting the best possible deal.

Why not get in touch with a friendly member of the team?

Is mortgage income protection the same as PPI?

No, while both income protection and PPI (payment protection insurance) can both be used to help cover expenses, there are some key differences.

Income protection is taken out to pay out a percentage of your salary if you were ever unable to work due to:

  • Accident
  • Sickness

Whereas PPI is usually sold alongside products that require you to make repayments (such as a mortgage, loan or credit card) and will cover your payments if you find yourself unable to work due to:

  • Accident
  • Sickness
  • Unemployment (due to redundancy)

The main difference between the two is that PPI will often only cover a specific debt and, when making a claim, the money will go directly to pay it off.

If taking out PPI to protect your mortgage, the funds will go directly towards your mortgage payments and you won’t be able to use the money for anything else.

Whereas income protection payments are paid directly to you and aren’t tied to a specific financial commitment, so you can spend them on whatever you need to get you by.

This could be to help you continue making your mortgage payments, as well as covering other essential costs such as your food shop, childcare costs and transportation costs - whatever your usual salary would take care of.

Why not speak to a friendly member of the Reassured Advice team about protecting your mortgage with income protection?

What is the difference between income protection and mortgage protection?

While both options can help to cover your mortgage payments while you’re unable to work, there are some key differences between the two policy types.

MPPI provides short-term cover (often up to a maximum of two years) and can be used to cover your mortgage payments and household bills in the event you can’t work due to sickness, accident or unemployment.

Income protection can be taken out on a short-term basis, but it can also be taken out long-term which can provide you with cover up until you retire.

Rather than covering a specific debt, income protection can be used however you wish.

As you’ll receive up to 70% of your usual income, payments could be used to cover mortgage payments as well as other essential daily living costs.

If you’re on a budget and looking for a short-term option to protect your mortgage, MPPI could be a good option.

However, if you’re looking for longer-term cover that can protect a wider range of financial commitments, income protection is an ideal option.

Income protection Mortgage payment protection
Can be short term (up to 2 years) or long term (cover until retirement) Covered for a set period time (often up to 2 years)
Can cover up to 70% of your usual income Can often pay mortgage payments in full (unless they exceed 65% of your annual income)
Covered for accident and sickness Covered for accident, sickness and unemployment
Payments made directly to you Payments are often paid directly to mortgage lender
Can cover other essential costs such as childcare costs, food shop etc Can only be used to cover mortgage payments and household bills

Mortgage payment protection insurance isn’t something that’s currently offered through Reassured or Reassured Advice

However, Reassured Advice can compare both short-term and long-term income protection quotes on your behalf, to find you the best option for protecting your mortgage - simply get in touch.

Protecting a mortgage - income protection vs life insurance

It’s common for those with a mortgage to take out a life insurance policy to protect this large expense for their loved ones.

This is to ensure your family can stay in the family home if the worst were to happen and you were to pass away.

However, income protection is an ideal way to protect this debt during your working life.

If you were ever unable to earn your usual income as a result of sickness or injury, you could use your payments to cover your monthly mortgage repayment.

Income protection Life insurance
Provides monthly income instalments Provides a lump sum pay out
Can make a claim while you’re unable to work due to accident or sickness Loved ones can make a claim after your passing
Payments can allow you to continue making mortgage payments while you’re not earning your usual income Ensure your loved ones can stay in the family home after your passing
You can also use the payments to cover other necessary costs Cover other necessary costs for your loved ones
No specific list of injuries you need to claim for Terminal illness comes as standard with term policies through Reassured, adding an extra layer of protection
Affordable cover from just 50p-a-day Possible to add critical illness cover for an additional cost
  Affordable cover from just 20p-a-month


It’s not a case of one or the other, if it’s within your budget it’s completely possible to take out multiple policies.

This could be a life insurance policy to keep loved ones in the family home after your passing and an income protection policy to protect your mortgage during your working life.

Why not use Reassured Advice to compare multiple policies to find the best option for you?

Top tips for protecting your mortgage

  • While mortgage lenders may suggest their preferred financial protection provider, this might not always be the best option as their provider may not offer the most favourable terms
  • Always compare quotes from multiple providers to ensure you’re getting the most cost-effective deal
  • If your budget allows, you may wish to take out multiple policies. For example, income protection to cover payments during your working life as well as a life insurance policy to ensure your loved ones can stay in the family home if the worst were to happen
  • Taking out a policy sooner rather than later, while you’re young and in good health, can ensure you lock in the cheapest premium possible
  • Seek the help of an expert, like Reassured Advice, who can not only compare income protection quotes but also a range of other policy types (such as life insurance and critical illness cover)

A mortgage is likely to be the biggest debt we’ll incur in our lifetime, so it makes sense to protect it. 

Why not let Reassured Advice help you protect yours?

Income protection for mortgage - Compare quotes

Hopefully, this article has helped you to understand how income protection can be used to protect your mortgage.

Seeking the help of an expert, like Reassured Advice, can help you to understand your options to ensure you’re getting the right financial protection.

By allowing Reassured Advice to compare quotes on your behalf, you can find the policy that meets all of your needs at a price that’s within your budget.

Simply get in touch for your free and no-obligation quotes.

Sources:

[1] https://www.mortgageable.co.uk/mortgages/how-much-does-the-average-mortgage-cost/

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