Aviva mortgage protection (A guide)

In this brief guide, we are going to discuss Aviva mortgage protection and how it can help you protect your mortgage.

What is mortgage protection insurance?

Mortgage protection insurance (MPI) is a type of life insurance(term life insurance) which pays off your mortgage if you pass away. Some mortgage protection policies will also pay your monthly mortgage repayments for a fixed time if you become disabled. Mortgage protection insurance essentially offers decreasing life cover.

This is because as time passes you repay your mortgage and hence your mortgage balance which is outstanding reduces. At the same time, the mortgage protection insurance which covers your mortgage balance will reduce. This is decreasing life cover.

Mortgage protection insurance ensures that if you pass away your family will continue to be able to live in your home as they will have the funds to pay off the mortgage via the mortgage protection insurance. You can either have a level term MPI or decreasing cover MPI.

The aviva mortgage protection

The Aviva mortgage protection can be obtained from as little as £5. You can start the application process on the Aviva website.

The Aviva mortgage protection insurance is essentially branded as its life insurance. It will pay you a cash lump sum if you pass away or are diagnosed as terminally ill and are not expected t live beyond 12 months.

Before getting the Aviva mortgage protection you should consider if you need it and what type you may need. You should look into how much debt you have and how much debts may be left behind if you suddenly passed away.

You can also choose to take out a joint Aviva mortgage protection cover or separate ones. With a joint Aviva mortgage protection cover, once one person dies the policy will be outa cash sum and the cover will end. The other person will not continue to be covered under the policy.

With separate Aviva mortgage protection policies, there will be two payouts if any person dies or is diagnosed as terminally ill and not expected to live beyond 12 months.

Types of Aviva mortgage protection

There are two types of Aviva mortgage protection cover. Te level term cover and the decreasing term cover. Both of these policies will protect your loved ones for a set amount of time which is fixed. The cover you choose will depend on how much you want to pay each month and what you want to cover.

The Level Cover

The Aviva mortgage protection with level cover means that the amount you are covered for will stay the same throughout the term of the policy. 

The premium you pay will also stay the same. You will get a lump sum payout if you die or are diagnosed as terminally ill and not expected to live beyond 12 months. You can ask for your lump sum payout to be protected from inflation. 

This could mean that your monthly premium rises but will ensure that the amount you are paid will still be vital and useful. If you choose to protect your lump-sum payout from inflation then the maximum annual increase would be 15% to your premium and 10% to your cover. 

Level cover may be suitable if you have an interest-only mortgage where your mortgage balance does not reduce over time.

You or your family can use the payout from your level cover policy to:

Pay off the mortgage

Pay your kids tuition fees

Go on holiday

Or whatever you feel like doing with it. There is no requirement to pay off the mortgage with it.

Decreasing cover

You can also have your Aviva mortgage protection set upas a decreasing cover. This means that the amount you are covered for reduces each month. This can be in line with your mortgage balance. As the amount of cover you have decreases every month this cover is usually cheaper. Your monthly premium on this cover will, however, remain the same throughout the cover. This cover is designed to help you pay off a repayment mortgage.

Key features of the Aviva mortgage protection

The policy has no cash-in value

You won’t receive any cover if you commit suicide or die dude to a self-inflicted wound within the first year.

If you are buying a home you can get the cover for free for 90 days as long as you provide a future start date that coincides with when you complete on your purchase.

If you separate from your partner a joint policy can be divided into two policies.

You can get cover for up to £5

Do you need mortgage protection?

Mortgage protection may be seen as something you dint need but for as little as £5 you could get cover which could pay off your mortgage balance if you became terminally ill or died.

You should consider how much it could help your family and if it is worth it.

Getting mortgage protection

If you are considering getting mortgage protection then you should search the whole market to find the best mortgage protection for your needs. You may be able to do this by asking your mortgage broker during your mortgage application or using an insurance broker.

Getting a mortgage

You may want to consider using an independent mortgage broker to get a mortgage.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application.

Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we discussed the Aviva mortgage protection. If you have any questions or comments please let us know.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.