Against the backdrop of the cost-of-living crisis already causing families to re-evaluate their financial outgoings, new research for MetLife UK, finds UK homeowners are opening themselves up to increased financial risk.
The insights show how this is compounded by a lack of savings, long repayment terms and the risk of missing mortgage payments, should the unexpected happen.
Despite 19% of respondents saying they had already missed at least one mortgage payment because of illness or injury, 46% of homeowners do not have adequate financial protection in place.
According to the figures from MetLife, 42% of those surveyed, have no savings to cover payments should illness or injury prevent them from working. This, MetLife believes, is a worrying trend as the average mortgage term has increased to 30 years, while the average age to be mortgage-free, currently 59, continues to rise. The bleak projections that show the cost-of-living crisis continuing to worsen through the winter and into 2023 and beyond, has however prompted 42% to think about mortgage protection policies,
Richard Horner, head of individual protection MetLife UK, said: “With increasingly long mortgage terms and statistics showing a quarter of employees took long term sickness leave, it is crucial that families and individuals are not putting their homes at increased risk.
The misconception that mortgage protection is expensive is preventing people from accessing what is an accessible and affordable form of insurance. Flexible plans like MortgageSafe work out at less than the price of one takeaway coffee a week. Through this product, mortgage payments are covered if illness or injury keeps people off work, providing both a safety net to fall back on and additional peace of mind.
As families review their outgoings and where they perhaps may need to tighten their belts, it also provides an opportunity to identify any gaps that may make them financially very vulnerable. Cost effective and valuable cover really can provide a safety net and peace of mind.”
Without savings to fall back on, 14% would have no one to turn to if they couldn’t pay the mortgage and slightly more (15%) would take out a short-term loan to tide them over. Family, however, is where the most people would turn, with 37% saying they would be their first port of call. Only would use insurance to cover their mortgage payments, highlighting a need to help consumers understand the affordable options available and why they exist.