Today’s guest post comes to us from Alban, the first guest-poster on My Personal Finance Journey. To read all of his articles, click on the following link – Alban’s previous guest posts.
Your home loan repayment may be scheduled into your budget every month, but it is much more than just another bill.
Your mortgage is tied to one of the most important assets you will ever own, and to a home which is central to maintaining your family’s way of life. As a result, you probably have home and contents insurance for your property to cover any damages or repairs, but do you have home loan insurance?
As you read about the top five reasons to insure your home loan, can you still answer the question of why your loan is not insured?
1 – Significant financial commitment
Typically a home loan repayment will make up a third of your income – that is the ratio which most lenders use to make sure that you can afford the repayments while maintaining your lifestyle and covering your other bills. As a result a home loan is not just like another bill which you would be able to scrape together some spare funds to cover the costs if you lost your job or couldn’t work.
To cover the repayments of your home loan through your savings or by changing your lifestyle would be nearly impossible because of the amount required each and every month, but if your home loan was insured, you could keep your home easily. An additional option here for adding more security to your loan payoff is to get a loan cosigner.
2 – Your house is your home
As such you should set more store by protecting your home and your home loan repayments because losing your home would impact you and your family in every facet of your lives. The security of a safe home is the foundation for a happy life and whether you have four children or are a young couple, there are few places in the world we can feel as secure as we do at home, so make sure that feeling is justified.
3 – Lose your job
People were losing their jobs before the Global Financial Crisis, but the shakeup has certainly made the event more prevalent and more devastating as savings, investments and interest rates mean less of a safety net for many families. Losing your job can come without warning and finding another can take some time. You also want to make sure you are choosing the right job in your search rather than snapping up something out of desperation. With home loan insurance you have the chance to assess the situation and decide whether it is time for a change of career or to pursue a passion and you can look at job loss as the opportunity it is, rather than the disaster it could be without insurance.
4 – Illness or injury
Illness or injury could strike you or a family member at any time and whether you are the one affected or you are the carer the household income can be quickly diverted or reduced to a dribble which is where you can benefit from the coverage of home loan insurance to continue to meet repayments. Illness and injury also often don’t come with a timeline and your family can be affected for an extended period. Even after recovery you may not be able to return to full time work or the same salary which is why you need home loan insurance protection.
5 – Premiums are tax deductible
In most cases you can claim the premiums you pay for home loan insurance at tax time so you can save on your income tax costs as well as protect your family and your home. With such easy and affordable options and so many good reasons to insure your home loan consider whether you and your family would be better off with home loan insurance.
Alban is a personal finance writer at Home Loan Finder. He helps people to compare home equity loans.
How about you all? Do you have home loan insurance? Have you ever investigated purchasing it?
Please share your experiences by commenting below!
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*Photo courtesy of Homeloaninsurance.net