When it’s time to remortgage, most homeowners naturally focus on their mortgage rate, monthly repayments and what deals might be available. But there’s another part of your finances that can easily be overlooked: your protection cover.
Recent research has found that many homeowners don’t properly review their protection when remortgaging, despite the fact their income, lifestyle or family circumstances may have changed considerably since they last arranged their mortgage.
At Gordon Anthony Mortgages, we help homeowners across Manchester and the North West understand both their mortgage and protection options, so a remortgage can also be a useful opportunity to take a wider look at your financial arrangements.
Most homeowners don’t fully review their protection
Research from Vitality found that only 18.6% of homeowners properly reviewed their protection needs when remortgaging. Almost two-thirds (64%) carried out only a cursory check, while 17% did not review their protection at all.
That matters because a protection policy arranged several years ago may no longer reflect your circumstances today. Your mortgage balance may have changed, your income could be different, or you may have experienced significant changes in your family or working life.
Protection needs are personal, and what was appropriate when you first took out your mortgage may not necessarily reflect your circumstances when you come to remortgage.
Why review protection when you remortgage?
Remortgaging is already a point at which you are taking stock of one of your biggest financial commitments, so it can be a natural time to consider whether your existing protection arrangements still reflect your needs.
Changes since you last reviewed your mortgage might include:
- Having children or other new dependants
- Getting married or separating
- Moving home
- Becoming self-employed
- Changing jobs or income
- Increasing or reducing your mortgage borrowing
- Changes to your household’s wider financial commitments
Not every change will mean that you need different protection. However, reviewing what you already have can help you understand whether your existing cover continues to reflect your circumstances.
What protection cover should you consider when remortgaging?
There are different forms of financial protection, and the type and level of cover that may be appropriate will depend on your individual circumstances.
- Life insurance can provide a financial payout if you die during the policy term, subject to the terms of the policy. For homeowners with a partner, children or other dependants, this could help provide financial support at a very difficult time.
- Critical illness cover is designed to pay out if you are diagnosed with one of the specified conditions covered by your policy and meet the relevant definitions.
- Income protection is designed to provide a proportion of your income if you are unable to work because of illness or injury, subject to the policy terms and any applicable waiting period.
These types of protection work differently, so it is important to understand exactly what a policy covers, how long the cover lasts and any exclusions that apply.
Could your circumstances have changed without your cover changing?
It’s easy for a protection policy to sit quietly in the background once it has been arranged. Meanwhile, life moves on.
You might have taken out life insurance when buying your first home, for example, but subsequently had children, changed career or moved to a different property. Alternatively, your income or mortgage commitments may now look very different.
The Vitality research highlights why this can be important. It found that many homeowners are remortgaging with protection that may no longer reflect their income, family circumstances or financial responsibilities.
The same research found that homeowners believed they could continue paying their mortgage for an average of 6.3 months if they lost their income, while almost one in ten said they would struggle beyond a single month.
This doesn’t mean that everyone needs additional or different protection. It does highlight the value of understanding what you already have in place and what financial support could be available if your circumstances unexpectedly changed.
Remortgaging isn’t only about finding a new rate
Searching for a new mortgage deal is understandably a major part of remortgaging, but it can also be a useful opportunity to look at the bigger picture.
Speaking to mortgage advisors in Manchester can help you understand the mortgage options that may be available based on your circumstances. At the same time, reviewing existing protection can help establish whether it continues to reflect your current needs.
At Gordon Anthony Mortgages, we work with homeowners across Manchester, Rawtenstall, Burnley, Accrington and the wider North West, providing straightforward support around mortgages and protection without unnecessary jargon.
Frequently asked questions about remortgaging and protection cover
Do I need to change my life insurance when I remortgage?
Not necessarily. Whether your existing cover remains appropriate will depend on your individual circumstances and the policy you already have. A remortgage can simply be a useful opportunity to review it.
What happens to my protection policy when I remortgage?
This will depend on the type of policy you have and its terms. Remortgaging does not necessarily mean you need a new protection policy, which is why reviewing your existing arrangements can be useful.
When should I review my protection cover?
Major financial and life changes can provide a useful prompt to review your cover. These might include remortgaging, moving home, having children, changing employment or experiencing a significant change in income.
Can a mortgage broker help with protection cover?
A mortgage and protection adviser can discuss your circumstances, explain the types of protection available and help you understand the options that may be suitable for your individual needs.
Thinking about remortgaging?
If your current mortgage deal is coming to an end, it could be a good time to look at your wider financial arrangements as well as your mortgage.
Whether you’re looking for a mortgage broker in Manchester or want to understand your existing protection arrangements, Gordon Anthony Mortgages can help you explore your options based on your individual circumstances.
We work with homeowners throughout Manchester and across the North West, including Rawtenstall, Burnley and Accrington.
Need to know
As with all insurance policies, conditions and exclusions will apply. You may have to pay an early repayment charge to your existing lender if you remortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.