By Matthew Horan CeMAP · Protection
Quick answer: If you're buying your first home, it's worth arranging protection at the same time as your mortgage. The ideal moment is before you exchange contracts, which is when you become legally committed to buy. Life insurance, critical illness cover and income protection each protect your payments in a different way, and a broker can arrange the mortgage and the cover together. Clarity Mortgages & Protection in Altrincham gives fee-free advice on both, with no obligation.
Buying your first home is exciting, and expensive. Between the deposit, the solicitor, the survey and the removal van, protection is often the last thing on the list. Many first-time buyers only think about it once they've moved in, if at all.
But your mortgage payments start whether or not you're able to work. A few sensible steps early on can protect the home you've worked hard to buy.
Why protection matters more for first-time buyers
First-time buyers often have a few things in common that make cover worth considering:
A large mortgage relative to your income. You've stretched to get on the ladder, so there's less room if your income stops.
Limited savings left over. After the deposit and costs of buying, emergency savings can be thin.
Someone relying on you. That might be a partner on a joint mortgage, or a family you're just starting.
Younger age. Cover is usually cheaper the earlier you start, and it's easier to get while you're in good health.
That doesn't mean you need every type of cover. It means it's worth thinking about what would happen if something went wrong.
What would happen if you couldn't pay?
It helps to ask a few honest questions:
If you died, could your partner or family keep the mortgage going?
If you were off work for several months through illness or injury, how long could you cope?
What do you get from your employer if you're ill, and for how long?
How long could your savings cover the mortgage?
If any of the answers worry you, that's what protection is for.
The main types of cover
Here's how the three main types work:
Life insurance pays a lump sum if you die during the policy term. It can pay off the mortgage or help your family keep paying it.
Critical illness cover pays a lump sum if you're diagnosed with a serious illness listed in the policy.
Income protection pays a monthly amount if you can't work because of illness or injury, which can go towards your mortgage and bills.
For a closer comparison, read Life insurance, critical illness or income protection: which one protects your mortgage? If you want to understand where life insurance on its own falls short, see Is Mortgage-Only Life Insurance Enough?
When to arrange it
The timing matters. Cover usually starts once the policy is in place and the insurer has accepted your application, which can take some time depending on your health and the type of cover.
A sensible approach is to:
Think about it when you speak to us about your mortgage. We can look at both at the same time.
Have it in place by exchange of contracts. That's when you become legally committed to the purchase, and your mortgage liability effectively begins.
Review it when your circumstances change. A new job, a baby, a marriage or a bigger mortgage can all change what you need.
If you've already completed and moved in, it's not too late. Cover can be arranged at any time, though it can cost more as you get older, and health conditions can affect it.
Joint mortgages: one policy or two?
If you're buying with a partner, there are a couple of ways to arrange life cover:
A joint life policy covers two people and usually pays out once, on the first death. It's often cheaper, but the cover ends after that claim.
Two single policies cost more, but each of you has your own cover. If one of you dies and the other later passes away, there can be a second payment.
Which suits you depends on your circumstances and budget. We'll talk through the options.
Fitting it into your budget
Protection is only useful if you keep paying for it, so it needs to be affordable. A few ways to bring the cost down:
Choose decreasing term life insurance if you have a repayment mortgage, as it's often cheaper than level term.
Pick a longer deferred period on income protection if you have good sick pay or savings.
Start with the cover that matters most, then add more later as your income grows.
Compare cover from a range of insurers rather than taking the first offer.
Building the monthly cost into your budget before you commit to a mortgage helps avoid surprises. We'll show you what the figures look like, so you can see what you're taking on.
Why get your mortgage and protection from one adviser?
When the same adviser looks at both, you get:
A mortgage and cover that fit together, in the right amount and for the right length of time
One point of contact from first conversation to completion
Cover compared across a range of insurers
A review later on, for example when your fixed rate ends. Our post on what to do when your fixed rate is ending explains why that's a good time to check both.
Frequently asked questions
Do I need life insurance as a first-time buyer?
Most residential lenders don't require it, but it's a common way to protect your home and your family. It's worth thinking about particularly if someone relies on your income.
When should I arrange protection?
Ideally before you exchange contracts, when you become legally committed to buy. We can look at it alongside your mortgage.
What if I have a health condition?
You may still be able to get cover, though it could affect the price or what's covered. Always answer health questions fully and honestly. We'll guide you through it.
Is protection expensive?
It depends on your age, health, whether you smoke, your job and the cover you choose. Starting younger is often cheaper. We'll give you real quotes.
Should my partner and I take a joint policy?
A joint policy is often cheaper but pays out once. Two single policies cost more but can give you more protection. We'll talk through what suits you.
Does it cost anything to speak to you?
No. We don't charge a fee for our advice. We're paid by the provider if you go ahead.
If you're buying your first home in Altrincham, Trafford or Cheshire, get in touch. It's fee-free with no obligation, and we'll look at your mortgage and protection together.
About the author
Matthew Horan CeMAP is Principal of Clarity Mortgages and Protection, an independent, fee-free mortgage and protection broker based in Altrincham. He has over 10 years' experience helping individuals, families and business owners with mortgages and protection, and writes in plain English because most people aren't given the chance to understand what they're signing.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
This article is general information, not advice. What's right for you depends on your own circumstances. Protection policies may not pay out in all circumstances and have exclusions and limitations, so check the policy terms. Most protection policies have no cash-in value if you stop paying or the term ends.
