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PPI Mortgages

It is bad enough to realise you have been paying for payment protection insurance on a personal loan, a credit card or even on an automobile loan, but to suddenly find that you have been paying PPI mortgages for several years without knowing it is untenable. Given the fact that loan insurance can cost as much as 50% or more of the amount you are borrowing that's a significant amount above and beyond what you should have been paying. Although you probably would notice PPI mortgages charges because they are so high, it is conceivable that the lender misrepresented what those charges were for! In any case, if it is substantiated that you were mis sold mortgage protection insurance and have been paying on it any length of time, you could be entitled to a tidy PPI reclaim amount along with compensation in some cases.

Understanding How Premiums Are Paid on PPI Mortgages

One thing which many consumers aren't aware of is the way in which the lender 'gets you' when mis selling PPI. Unlike other insurance products, PPI mortgages cover is a onetime premium assessed when you close on the loan. So, for example, your home loan is for £250,000 and your premium is rated at 25%. This would mean that you are virtually paying £375,000 for a £250,000 mortgage loan if there were no interest involved. However, there is interest on that amount because the lender is paying the insurance company that onetime premium which is then amortised right along with your mortgage loan over the specified number of years, 20, 30, etc.

Where Lenders Make Their Money on PPI Mortgages

Bear in mind that during the first year/s of your loan very little goes toward the principle which means that you are paying almost all interest. But, the sad part about PPI mortgages is that the interest on £125,000 is enormous. That is profit which is realised 100% by the lender as the insurance company has already been paid. In fact, this is a good example of just why you would file a mis sold PPI mortgages claim against the lender and not against the insurance company - primarily because they didn't sell the cover but also because they have been paid by a third party! The insurance company has no idea how you were sold that cover, they just know you were.

Take heart that you do have recourse after having been mis sold PPI mortgages. You can file PPI claims against the lender to claim back anything you have spent and may also receive interest as welll. The only thing to remember is that onus of proof is basically on you unless it is a blatant case of mis selling PPI mortgages, such as if you are self employed, retired or perhaps excluded for a pre-existing medical conditions.

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