Direct Line’s fixed rate mortgages.

Last Wednesday was a difficult day at the stock market. Behold a lesser mirror image of Wall Street market in the States; wrecking the bank shares, and feeding the speculation about upcoming inflation, the index of FTSE 100 stocks dramatically dropped by 160 points. The market in the States is suddenly dumbfound with realization that sub-prime lenders are far from being healthily well-off, to say the least. If New Century’s potential bankruptcy is any indication of the times, it comes with no surprise that banks are feverishly reviewing their assets and are revising their terms and policies.US sub-prime lenders are hit by highest wave of late payments and repossessions in the history of this service. It is a relief to know that for a number of reasons such crisis in unlikely to occur in the United Kingdom. The percentage of sub-prime mortgages compared to regular mortgages is smaller, property in Europe being an attraction for large number of foreign investors, different lending policies, and finally, British financial common sense, are the beneficial factors that will likely outweigh the threat of market instability. Ian Giles, director of marketing at Kensington Mortgages, for instance, comments that “By introducing a tiered approach to risk we are allowing those people who can afford to do so, borrow more, and helping more people to buy their own homes.” In the light of the present situation, the words “those people who can afford to do so” acquire a new profound significance, and are the key.

Amidst the anxiety and the controversy surrounding the sensitive issue, fixed rate mortgages reign supreme. According to the Council of Mortgage Lenders, 85 % of first-time buyers select the fixed- rate option. Within last week eight major mortgage lenders, including such major players as Direct Line and Britannia, have reduced their fixed-rate offerings in a bid to ensure stability and to promote better budgeting. Another product, suddenly big and bold on the top of a ‘must – have’ list is financial insurance. No big surprise there either. The Royal Bank of Scotland Group’s Direct Line Insurance is certainly blossoming. With RBS Global Banking & Markets being a leading banking partner to major corporate and financial institutions worldwide, Direct Line has financial support second to no other company in the UK. At the time when almost all mortgages come with mandatory insurance on all lending products, Direct Line provides its customers with a full range of insurance, debt financing and risk management, offering discounts on its insurance for those who take out their loan or mortgage. After receiving a recent blow, the banks aim to stay on top of the game. Not a single lender, not even Direct Line, offers Inflation Insurance, really.

Replace your lost income with income protection insurance

There is no longer such a thing as a ‘job for life’ and while no one likes to imagine the worst happening it can and it does and if you haven’t taken steps towards planning for what would happen if you were to lose your income, then you could be in great financial difficulty if you cannot afford to pay your essential monthly outgoings. Income protection insurance, however could give you great peace of mind not to mention security by replacing your income should you become out of work, providing it’s suitable for your circumstances.

An income payment protection insurance plan will give you a tax free sum of money each and every month once you have been out of work usually for 30 days or more. It will then continue to cover your lost income up to a set amount for up to 12 months if it is needed and some providers pay for up to 24 months.

Income protection insurance is an invaluable safety net on which you can fall and can make find another job and get back to work. While it can be valuable protection the product isn’t suitable for all circumstances and this isn’t always made clear at the time of taking out the policy. Exclusions that could mean you wouldn’t be eligible to claim include being in part time employment, being retired, and self-employed or suffering from a pre-existing medical condition at the time of taking out the cover.

You should always check the small print for any exclusions along with the key facts regarding an income protection insurance policy and you can get these facts from a standalone provider if you are not sure. A specialist in payment protection can always give you advice along with giving you the cheapest premiums for your income protection insurance policy.