Mortgages and Protection terminology
Simply a loan that you use to buy your house with. It is secured on the house you buy hence the warning “Your home will be repossessed if you do not keep up repayments”. They are available in all shapes and sizes. Therefore you should be able to find one which suits you, for example
Interest only - This is were you make an interest payment each month to keep the amount you the same. At the end of the term you have to pay the money back or sell your home.
As its name suggests you pay the loan back over an agreed term. At the end of the term your home is all yours!
There are various things that need financial protection here are a few examples of how you can cover them.
Quite simply if you die then the life assurance company will pay out a sum of money, known as the Sum Assured. There are many different types of Life Assurance for example:
In return for paying a regular premium for a fixed period of time, the Term, the insurance company will pay out an agreed sum assured. At the end of the term the policy finishes.
This is where you pay the premium for the “whole of your Life” and the insurance company pays out when you die, whenever that may be.
The sum assured decreases by a known amount each year until it reaches zero at a fixed date in the future.
Designed to pay off the outstanding balance of your mortgage should you die during the term of your mortgage.