Posted by John Yerou
on November 16th, 2010 06:00am in
Last Updated on September 11th, 2018 16:29pm.
Unemployment Protection for mortgage holders
If you have your mortgage with the Yorkshire Building Society and you are an employee (Not Self-employed), you will be interested to know that Britain’s second largest Building Society is considering giving free unemployment protection to all its mortgage holders.
The Yorkshire BS is currently having talks with insurers to see if they can buy a blanket unemployment policy which will provide cover for all its mortgage borrowers if they are made redundant.
Self Employed Contractors and Freelancers operating through an Umbrella or their own Limited Company will not be eligible for this cover due their contractor status. Unfortunately, a number of contractors have been mislead by inexperienced advisers who do not understand the unique way in which contractors work.
However, for PAYE employees this is good news. Although details are still in the initial planning stage, this new initiative could be introduced next year and the good news for customers is that they will not face any extra charges. It is expected that the cover will cost the Yorkshire tens of millions of pounds to insure all of its 400,000 borrowers.
This might seem like a drastic step but it reflects the concerns of the mortgage lending industry as a whole as they worry about the impact the financial crisis is having on borrowers. The problem is also likely to get worse as the Government’s austerity measures take hold.
A senior figure at the Yorkshire said the economic crisis had caused the Building Society to take an imaginative look at the financial risks facing the business. Although the Yorkshire is reasonably optimistic about the recovery continuing, it pays to err on the side of caution and have a contingency plan if things start to go wrong.
Currently there are no other lenders considering a similar scheme but this could change if the economic outlook worsens.
Author: John Yerou
John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.