Compensation over Self Certified Mortgage
Payment protection insurance (PPI) is for borrowers who wish to ensure that their payments on a loan or mortgage will be made in the event they lose their source of employment. A self certified mortgage is a mortgage in which the borrower does not have to prove his income to get approved for the loan. The problem with payment protection and self certified mortgages is the borrower is not proving income either because they are self-employed or have income coming from several different sources making it hard to prove that income. Keep in mind that self employed persons are not eligible for PPI!
Reasons to Get a Self Certified Mortgage
Mortgage brokers tend to lend on the basis of salary declared on paychecks. Some borrowers however may not be able to provide the standard proof of income. These borrowers are people who own their business or have multiple sources of income. The only problem with self certified mortgages is that the borrower's income tends to fluctuate with the economy, mainly as a effect of being self-employed. Given the fact, that a borrower's income may fluctuate vendors are hesitant to approve borrowers for fixed mortgages that cannot prove the income. These factors alone can make someone feel pressured to get PPI compensation over certified mortgage in an attempt to create a safety net for their house but unfortunately the lender should never sell PPI under these circumstances as the buyer is just not eligible for cover.
Why Stay Away from PPI
Payment protection insurance is intended for borrowers who want the peace of mind
that comes with knowing that even if you become ill, have an accident or lose your source of income
as a result of involuntary unemployment that your mortgage and or credit card payments will still be getting paid. The only drawback to this is that
in some cases people were mis-sold the payment protection policies by not letting the person know what qualifies and/or disqualifies them from being eligible, not disclosing the structure or payment scale of the policy in regard to the loan, or secretly placing the protection in the loan agreement. A person who has a self certified mortgage will not be eligible for payment protection claims as a result of them being self-employed because there is no way to guarantee that they make the same amount of money week after week, month after month.
Why to Cancel PPI for a Self Certified Mortgage
Borrowers with self certified mortgages are generally stepping out on limb when applying for and especially when approved for a mortgage loan. The lenders know that these borrowers have no proof of income, therefore, they make special stipulations in the loan and ask for more money down and charge higher interest rates. If a borrower has PPI and a self certified mortgage they don't tend to get PPI compensation over self certified mortgage usually because a borrower must have a job to be approved for PPI. When the borrower is pressured by the lender to purchase PPI he/she may think that the insurance may be beneficial to them if it would give them PPI compensation over self certified mortgage. PPI can be mis-sold even when the person has a verifiable form of income, whereas, PPI compensation for self certified mortgage would always be mis sold.
If your lender coerced you into PPI knowing that you are self certified for a mortgage, your legal recourse is to file a PPI claim against that lender. For details on how to file a claim effectively, consult with the claims team of Belmont Thornton on 0207 471 2000.
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