Rachel McKay, mortgage analyst at Moneyfacts, commented:
"How many clients accept the MPPI policy offered to them by their mortgage provider? By the time they’ve been through their mortgage application process - which can be a lengthy ordeal, following increased regulatory requirements – they may be tempted to sign up to the lender’s own policy, just to save time.
"Consumers need to be made aware that shopping around for MPPI cover, either direct or via their IFA, is an avenue well worth exploring. So by spending a little time at the mortgage application stage, they can save themselves a significant sum in the longer term.
"Much has been written about the potential savings that can be made on PPI when taking out personal loan products if people are prepared to shop around, rather than accept the quotation provided by their lender. It is exactly the same principle for MPPI.
"In the mortgage arena, the situation is the same in that there are now a number of independent sources offering a cheaper and wider range of product options, which can result in thousands of pounds being saved over the term of a mortgage.
"There is a mindset that needs to be broken, as whilst people are getting used to shopping around to save on car insurance, home insurance, utility providers and credit cards, they need to be made aware that there are alternative providers of MPPI, offering equal levels of cover but at a much reduced cost.
"New deals are evolving all the time and, as the table below illustrates, some of the newcomers to this field are offering solutions which are cheaper and more innovative than some of the established players.
"Britishinsurance.com has carried out its own research in which it claims that it can save almost one third of cost when compared against similar products offered by the top ten lenders. Select and Protect is another of the new kids on the MPPI block and can offer deals that are equally competitive as they are priced according to age bands.
"For anyone under the age of 40 the savings are pretty impressive, especially when you multiply the monthly saving by a factor of say 240 or 300 for mortgage terms of 20 or 25 years respectively."
