Insure against mortgage interest rate rises

[CoverItAll]

Have a look at www.marketguard.com

Maybe some of the Forum's Mortgage Experts could let us have their opinions on this.

[Adam Davies]

Hi John
An interesting scheme,I tried to get a quote but no luck.I noticed that the company is based in Gibraltar,are they covered by the usual finanacial regulations John ?
It will be interesting to see how much it costs against the cost of a full two year rate rise of say 1%
Regards

[CoverItAll]

Hi Andy, our Compliance Consultant also works in Gibraltar, and we are designing a Mortgage Payment Protection Insurance to be sold there. I will find out exactly how their FSA protection compares with ours, and let you know.

[Andrew Graveson]

It's pretty normal for insurers to base themselves in Gibralter. I would imagine this is for tax purposes.

As they operate within the UK their operations here fall within the remit of the FSA. The regulatory regime is based on where the customer is rather than where the insurer is. This includes rules on liquidity to help ensure that they can meet claims.

Not sure there will be much of a market for this. Isn't a fixed mortgage rate in effect a form of insurance anyway?

[Adam Davies]

Hi
Thanks Andrew
I can see a market for this insurance if they can run it over a five year IVA term.This would have the same effect of fixing the mortgage payments for five years,a positive for both the debtor and creditor during an IVA
Regards

[Andrew Graveson]

Hello Andy,

Do you think the creditors would accept the expense? A five year policy would surely have to be very costly.

I'm sure John might have something to add on this topic with his experience marketing a product to protect IVA payments.

[Adam Davies]

Hi
I am guessing that it will be fairly inexpensive,although I can't get a quote from the site
Regards

[Andrew Graveson]

Hi Andy,

I'm going to have a go on it tomorrow. I can only imagine that a policy over a number of years will be enormously expensive.

Hope I'm wrong.....one of us is!

[MelanieGiles]

Smart idea - Andrew make sure you post the results of your investigation on the forum.

[gavin]

i got 1 andy Insurance Quote
You are protected from the point where your mortgage rate and the BoE rate rise above the excess.

1% excess £52 per month

1.5% excess £34 per month

2% excess £22 per month

2.5% excess £15 per month
thats on £120000

[louiseh]

it doesn't protect against rises in mortgage costs due to the end of a fixed rate deal. You can't take out the insurance until your fixed rate as nearly finished. It only seems worthwhile if you can't get a fixed rate and rates happened to be low at the time.

[jhonpaul12]

I think that You can't take out the insurance until your fixed rate as nearly finished. In general, the longer you plan to own the home, the more points help you save on interest over the life of the loan. And mortgage rates have been rising recently and many people are finding that when they come to the end of their current fixed-rate.