When arranging a mortgage, most people focus on rates, deposits and affordability. But there is a more important question sitting behind it all. What would happen to your home if your income stopped?
At Gordon Anthony Mortgages, we believe mortgage advice is about more than securing the right deal. It is about helping you protect your financial stability for the long term. Income protection plays an important role in that conversation.
As experienced mortgage advisors in Manchester including clients looking for mortgage services in Burnley, Rawtenstall, Accrington and surrounding areas, we regularly see how income protection is overlooked, particularly by self-employed clients and growing families.
In this blog, we break it down clearly so you end up with a clear understanding of what income protection is, and how it can help.
What is income protection?
Income protection insurance, sometimes referred to as permanent health insurance, is designed to provide a portion of your income if you are unable to work due to illness or injury.
Unlike critical illness cover, which provides a one-off lump sum, income protection pays regular monthly payments. These payments are designed to help cover essential living expenses such as your mortgage, rent, bills and daily living costs. Payments continue until you are able to return to work, retire or reach the end of the policy term, whichever comes first.
Income protection can cover a wide range of medical conditions, from mental health issues such as depression to long-term illnesses or physical injuries. The aim is to protect your financial stability if you are unable to earn for an extended period.
For homeowners, business owners and employed professionals alike, that stability can make a significant difference.
Do you need income protection?
Whether income protection is right for you depends on your personal situation and financial safety net.
If you were unable to work for several months, would your savings comfortably cover your mortgage and essential outgoings? Does your employer offer a sick pay scheme, and if so, how long would it last and would it cover all your monthly commitments?
For those who are self-employed, contractors or company directors, the question is often more direct. If you are not working, are you still earning?
If you are the only earner in your household, or you have dependents relying on your income to keep a roof over their heads and maintain day-to-day living costs, the financial impact of illness or injury can be significant.
As part of our mortgage advice in Manchester and across the North West, we discuss protection alongside borrowing, so your home is supported by a wider financial safety net.
How much cover do you need?
The amount of cover required depends on your financial commitments and the level of income you want to replace. Typically, income protection policies cover between 50 and 70 percent of your monthly pre-tax income.
When assessing the right level of cover, it is important to consider your essential living expenses, including mortgage payments, utility bills, food and travel costs. Any employer sick pay or state benefits you may receive should also be taken into account, as these can reduce the amount of cover required.
Dependants and long-term financial commitments also play a role. The objective is to ensure you have enough protection to maintain financial stability, without over-insuring and paying more in premiums than necessary.
Jack Cunningham, Business Principal, Mortgage & Protection Advisor at Gordon Anthony Mortgages explains:
“When we arrange a mortgage, we are not just looking at what you can afford today. We are looking at how sustainable that mortgage is if life changes. Protecting your income is often the piece people forget, but it is one of the most important.”
At Gordon Anthony Mortgages, that long-term thinking drives our advice across the board, supporting clients who need mortgage advisors in Manchester, Burnley, Accrington, Rawtenstall and the surrounding areas.
Why mortgage advisors in Manchester and across the UK recommend protecting your income
As mortgage advisors in Manchester, we see first-hand how closely income and mortgage commitments are linked. Securing the right deal is important, but ensuring that mortgage remains affordable if circumstances change is equally vital.
When working with a mortgage broker in Manchester, income protection should form part of a wider conversation about financial resilience. It is not an add-on. It is a safeguard.
At Gordon Anthony Mortgages, we look beyond interest rates. We consider sustainability. That means understanding how your mortgage would be supported if illness or injury prevented you from working.
What affects the cost?
Several factors influence the cost of income protection insurance.
Your age and health are key considerations, as younger applicants typically pay lower premiums and medical history can affect pricing or exclusions. Your occupation also matters. Policies that cover you if you are unable to perform your specific job, known as own occupation cover, generally provide more comprehensive protection but may cost more than policies that only pay out if you are unable to perform any occupation.
The deferred period, sometimes called the waiting period, is another important factor. This is the length of time between becoming unable to work and when the policy begins to pay out. Deferred periods can range from around four weeks to twelve months. A shorter waiting period means payments begin sooner but premiums are usually higher. A longer deferred period can reduce the cost but requires you to manage financially for longer before support begins.
You may also choose index-linked cover, which increases your benefit in line with inflation to help maintain its value over time. Policies can be arranged with guaranteed premiums, which remain the same throughout the term, or reviewable premiums, which may change over time.
The length of the policy term will also influence cost. Short-term policies typically pay out for a limited period, often one to two years. Long-term policies continue until you return to work, retire or reach a specified age, commonly 65 or 70, and provide more comprehensive protection.
Reviewing your cover regularly
Life changes, and so do your financial needs. It is important to review your income protection policy regularly to ensure it continues to provide adequate cover.
A salary increase, change in employment, becoming self-employed, starting a family or taking on additional financial commitments may all mean your existing cover needs adjusting. Over time, inflation can also reduce the real value of your protection if it is not reviewed.
As part of our ongoing service, we encourage clients to revisit protection arrangements to ensure they remain appropriate and cost-effective.
Speak to a mortgage broker in Manchester about income protection
Securing the right mortgage deal is an important step. Protecting the income that supports it is just as important.
At Gordon Anthony Mortgages, we provide mortgage advice in Accrington, Rawtenstall, Burnley and surrounding areas, as well as supporting clients looking for mortgage advisors in Manchester and across the North West. Our approach is clear, tailored advice, straightforward explanations and long-term support.
If you would like to review your protection arrangements or explore income protection as part of your mortgage planning, speak to our team today.
We are here to help you protect more than just the rate.
Your home may be repossessed if you do not keep up repayments on your mortgage. As with all insurance policies, conditions and exclusions will apply. The cost of this insurance depends on several factors, such as your age, where you live and your occupation. As a result, the cost you will pay is based on your own circumstances.
Frequently asked questions about income protection
How much income protection can I take out?
Most income protection policies cover between 50 and 70 percent of your gross monthly income. The exact amount depends on your earnings, employment status and insurer criteria.
When does income protection start paying out?
This depends on the deferred period you choose. Payments can begin after a waiting period of around four weeks up to twelve months. The longer the deferred period, the lower the premium is typically.
Is income protection worth it if I have sick pay?
Employer sick pay can provide short-term support, but it often has a time limit. Income protection can provide longer-term financial stability if you are unable to return to work for an extended period.
Does income protection cover mental health conditions?
Many policies cover a wide range of medical conditions, including mental health issues such as depression, subject to policy terms and underwriting.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain.