Personal finance site moneynet has warned that many of the 2.5 million homeowners that have mortgage payment protection insurance could be paying up to 33% more than they need to.
Moneynet claims that mortgage lenders are taking advantage of borrowers on the basis that most are ignorant of the fact that they can shop around for their MPPI.
Over 2,534,000 of UK homeowners now have MPPI and the take-up rate for new policies is increasing. In 1998, 23% of new mortgages were taken out with this insurance; in the last six months of 2001, the figure had increased to 36%. But premiums vary between the providers.
Richard Brown, managing director of moneynet, says: “Just because a mortgage payment protection plan is one of the most expensive, it doesn't mean you are getting a better level of cover. In fact, the only difference in 99% of the cases is how much commission goes into the provider's pocket.
“People should be aware that they can shop around. If every policyholder switched to a lower cost policy, some £6bn could be saved nationally over the term of an average mortgage. It's time this protection rip-off was highlighted to the consumer.”