Don't rely on government to save your home
Friday, 05 Dec 2008 15:00
Consumers should not rely on the government's scheme to help homeowners avoid repossession, an insurer has warned.
Gordon Brown announced a scheme on Wednesday to allow homeowners to defer the interest on their mortgage payments for up to two years in the event they lose their income.
However, Insurancewide has warned consumers not to rely on the government to protect their income.
"It is essentially a government-backed insurance policy with limited cover, so you need to look at that cover and if it is not enough, you should go to the private market," explained James Harrison, chief executive of
Insurancewide.
"You need to treat the scheme like an insurance policy – so you should first of all check the terms and conditions.
"The government scheme says you can negotiate with your bank on your mortgage if it is your home. So if you have a buy-to-let or a second home it doesn't cover you.
"And it is for interest only, so if you have a repayment mortgage it will not cover you.
"Payment protection insurance can help with all the other things, like credit card bills and loans, so it is not irrelevant," Mr Harrison added.
The government has agreed the scheme with eight lenders but has not yet released details of the proposal, such as who would qualify.
Insurancewide advises consumers to check what redundancy package they can expect from their firm and then shop around to find the best cover.