With rising rates, is your mortgage repayment cover enough?
When was the last time you checked your mortgage protection insurance? Over the past few months, interest rates have been rising rapidly, with some rates almost doubling. It’s been a sharp, rapid rise that has had an impact on many homeowners. So with interest rates rising, what happens to mortgage protection insurance?
Mortgage protection insurance covers you in the event you are unable to repay your mortgage. This could be due to injury or sickness. Mortgage repayment insurance kicks in and meets your monthly repayments, which is one less thing for you to have to worry about.
Of course, with the rates rising many may find themselves caught out with their level of cover being too low, as mortgage repayment insurance is not automatically adjusted with the change in interest rates. If you took out mortgage protection in the last year or two, your rate today is likely higher than when you initially took out the cover, increasing your repayments. This means there could be a shortfall in your mortgage protection, and your full monthly repayment may not be covered.
Generally mortgage protection protects 110-115% of your monthly mortgage repayments, meaning there is some small leeway should rates increase a little. However with rates rising so dramatically, the level of cover needs to be adjusted to ensure that the full repayment is still being met.
We recommend reviewing your level of mortgage repayment insurance cover every year, and our Insurance Adviser, Allanah Greer is more than happy to help. Allanah can do an analysis to see how much cover you need, whether you are fully protected, and if we need to increase the level of cover.
If you don't already have mortgage protection and would like peace of mind knowing that if you are unable to work, your repayments are covered, please get in touch and Allanah can discuss options with you. This form of insurance is simple to set up, and once you are working with us, we will check in regularly with you to ensure that the level of cover is still correct.
Give Allanah, our Queenstown, Wanaka & Central Otago Insurance Adviser a call today on 021 974 853.