MPPI Cover Must Keep Track of Volatile Base Rate

Borrowers on tracker deals will be able to make huge savings on their mortgage payment protection insurance (MPPI) because of changes in the Bank of England Base Rate.

Braintree, Essex (PRWEB) November 12, 2008 -- Borrowers on tracker deals will be able to make huge savings on their mortgage payment protection insurance (MPPI) because of changes in the Bank of England Base Rate.

Sara-Ann Burgess, MD Burgesses

Many borrowers take out MPPI at the same time as they arrange their mortgage. They then don't look at it again until they need to make a claim. However because interest rates are continually moving it is very easy for borrowers to find their initial MPPI cover is not aligned to what they are actually paying each month for their mortgage.

If borrowers have taken out their MPPI when rates were high, they will now be paying for more than they need

This is a perfect opportunity for them to review what they have in place and make sure it is suitable.

Independent and ethical brokers like British Insurance will help borrowers get MPPI that is excellent value. At a time when money is tight, many borrowers will find they can keep their MPPI in place, but make significant savings by switching provider and adjusting the amount of cover they are buying.

She explained: "Many borrowers take out MPPI at the same time as they arrange their mortgage. They then don't look at it again until they need to make a claim. However because interest rates are continually moving it is very easy for borrowers to find their initial MPPI cover is not aligned to what they are actually paying each month for their mortgage."

According to Burgess, this means a lot of borrowers are either buying too much cover or not enough to meet their monthly payments.

In February 2000 the Bank of England Base Rate stood at 6%. By July 2003 that had fallen to 3.5%. It then climbed steadily before hitting 5.75% in July 2007 and has since plummeted back to the 3% in stands at today.

At a rate of 6%, a 25 year mortgage of £150 000 will cost £966.45 a month on a repayment basis. At 3% the same mortgage will only cost £711.32. Borrowers on tracker deals who have not reviewed their MPPI could therefore be paying for hundreds of pounds of protection they do not need.

"If borrowers have taken out their MPPI when rates were high, they will now be paying for more than they need," said Burgess. "This is a perfect opportunity for them to review what they have in place and make sure it is suitable."

Burgess said many borrowers would also have bought their MPPI policies from high street providers who were generally more expensive than some of the specialist and independent intermediaries in the market.

She commented: "Independent and ethical brokers like British Insurance will help borrowers get MPPI that is excellent value. At a time when money is tight, many borrowers will find they can keep their MPPI in place, but make significant savings by switching provider and adjusting the amount of cover they are buying."

Keeping on top of financial matters is never easy, but for those looking to save money and keep themselves protected, Burgess said the effort would be well worth it.

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