The warning comes from Paymentshield a provider of MPPI to intermediaries. It says that too many people have been put off purchasing cover that secures the roof over their heads should they become unable to work through accident, sickness or unemployment, believing the government-sponsored Homeowner Mortgage Support Scheme would provide a repayment breathing space.
However the scheme is floundering due to lack of lender support with major high street players such as Abbey, Barclays and Nationwide remaining unsigned as the deadline passed.
“This will come as a reality shock to many homeowners,” says Paymentshield Head of Marketing Sandy McPherson.
“At a time when unemployment is expected to rocket, worried homeowners may have thought that with the Government’s initiative the house would be safe at least as mortgage interest could be deferred for a couple of years under the scheme.
“That is now looking more and more unlikely for many as some of the biggest lenders have been unable to commit. Homeowners need to look after their own best interests and if they can currently afford to make their mortgage repayments then they can certainly afford MPPI premiums. The peace of mind this buys is well worth the monthly outgoing.”
Yorkshire and Skipton building societies, the UK's third and fifth biggest mutual lenders, have also ruled out signing up to the scheme for the time being. The Building Societies Association said it expected most lenders to reject the Government's proposals.
GMAC, one of the largest sub-prime and specialist mortgage lenders, could not make a decision whether to sign up or not before the deadline passed. Kensington, another sub-prime lender, was also unable to sign up
One in three Britons is worried that their home may be repossessed, with three-quarters of people claiming the Government should do more to help struggling homeowners, a survey has shown.
Around 43% of joint income households with a mortgage say they are worried to some degree that they wouldn’t be able to pay their mortgage if the main income earner lost their job, according to consumer group Which?.
“Brokers need to impress upon their clients the very real need to protect their greatest asset – their home – through MPPI,” added McPherson.
