What happens to my mortgage if I lose my job?

What happens to my mortgage if I lose my job?

27th Jun, 2019

Life is unpredictable, and can throw a whole range of circumstances – like redundancies, illnesses and bereavements – in your path when you least expect it. 

And, this can have a devastating effect on you, your finances, and ultimately, your mortgage. 

It’s a good idea to have a plan in place in case you suddenly lose your income, so what can you do to keep a roof over your head when times become tough? 

Protection insurance

If you have family members or others who rely on your income, it is a good idea to think about some form of protection plan or insurance. There are a number of products available nowadays, which can cover your repayments when you can’t – but there may be guidelines put in place by your employer already, so ensure you check before investing.  

Life insurance is a great way to get access to a lump sum if someone dies unexpectedly. Similarly, critical illness cover also provides you with one-off payments if you’re struck with a specified illness or disease, and unable to work. 

Income/short-term income protection does exactly what it suggests on the tin – gives you money to pay for your mortgage, in regular monthly payments. 

A more expensive option is Mortgage Payment Protection, which will cover your home repayments in full, for a given period of time.  

Rainy day fund

Insurance can be expensive, and if you’d prefer to build your own pot of savings, go ahead! However, this does require you to be disciplined – sacrificing other things to build up the money, and ensuring you only dip into it when you have no other choice. 

The minimum we advise you save is three months’ worth of mortgage repayments – anything above this is an added bonus. If you find that you’re struggling to save, it’s a good idea to look at a budget planner, which will highlight where you can make some cutbacks. 

The only downfall of this method is if you’re out of work for a long period of time – your funds will then disappear very quickly! 

On top of the other stresses of buying a property and securing a mortgage, repayments can be an issue constantly at the back of your mind. So, to eliminate this, ensure you have put some steps in place and a plan together – and fingers crossed you’ll have nothing to worry about. 

View all posts by Laura Anne Townson

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