Do you have a financial plan to protect your home?

Taking out a mortgage is the biggest financial decision most of us take - but what happens if you become ill or can no longer work?

Taking out a mortgage is the biggest financial commitment many of us will ever make, and having a financial plan in place will help protect your home in the event that you can't work due to illness or ill health, or even your premature death.

However, recent survey results from Scottish Widows (SW) makes for concerning reading.

No life cover

It's estimated that half of the UK's mortgage holders have no life cover in place, meaning that 8.2million people are leaving themselves and their families financially exposed if the worst were to happen.

SW's latest protection research also shows that only a fifth (20%) of the UK's mortgage holders have a critical illness policy, leaving many more millions at risk of financial hardship or losing their home if they were to become seriously ill.

Unable to work

A third (33%) admit that if they or their partner were unable to work for six months or longer due to ill health or personal injury, they'd be unable to live on a single income. And more than two fifths (43%) of those who couldn't cope with a single wage say they would resort to dipping into their savings in order to survive.

Yet 43% say their savings would last no more than a couple of months, and 15% don't even know how much they have, meaning they could be relying on backup which doesn't actually exist.

Mortgage arrears

Just under a quarter (23%) could only afford to pay household bills for a maximum of three months if they or their partner were unable to work - and 23% could make a maximum of just three monthly mortgage payments. Another 15% admit they're not actually sure how long they'd be able to cope with their mortgage payments.

Welfare reforms make the case for financial protection all the more pressing. A quarter (25%) of mortgage holders who say they'd be unable to live on a single income if their partner was unable to work also admit that they'd rely on state benefits to ensure they could manage financially.

Changes to Support for Mortgage Interest, which is the only safety net in place for many families if they were unable to pay the mortgage, mean that people now have to wait 39 weeks before receiving this benefit instead of the previous 13 weeks, which could be too late for many if they have no other protection in place.

So are you at risk?

None of us want to think about the worst, but these findings show that there is an alarming number of mortgage holders who are putting themselves at risk by not arranging cover for the unexpected.

To review you protection requirements, you can arrange an appointment with one of our independent financial advisers by clicking here.