‘Homeowners need mortgage protection’

The British Money director said it was time for lenders to take the initiative and demonstrate to customers that the providers are truly customer-focused.

He said: “If lenders do not offer income protection, then first-time buyers should be lobbying their mortgage providers to do so.”

The Essex-based protection insurance provider said he believed high-street lenders should include mortgage protection to prevent first-time buyers from falling into arrears due to ill health or inability to work.

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This way, mortgage repayments will continue to be paid for up to a year if a salary is lost due to unemployment, accident or sickness.

According to Mr Burgess, this form of “compulsion” would cost lenders a fifth of what consumers pay for the cover, and the additional insurance outlay could be recouped by adding it onto the APR at 0.009 per cent.

Advisre view

Simon Webster, managing director of the Kent-based Facts & Figures Financial Planners, said: “People should take out mortgage protection as there is a genuine problem that the British public is under-insured. However, it should be the right insurance, written in the right way and at the right price.

“For some it is critical illness insurance; for others it is something else. The government is saying you need to get advice about retirement, but by the same token, when people make the largest financial commitment of their lives, taking out a mortgage, they should also get independent financial advice. The government should be saying this.”