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Clients should cover all the angles

I’m feeling slightly nervous while writing this column – it’s only a few hours until Celtic take on Manchester United to decide their fate in the Champions League. By the time you read this Celtic will probably have been thrashed but you can’t blame me for a bit of wishful thinking.

Turning to mortgages, worrying research from protection specialist Bright Grey suggests people are more likely to protect their TV from theft than take steps to cover their mortgage.

Only 23% of home owners have mortgage payment protection insurance in place while 74% have their home contents covered. Asked what things people think are most important to insure, life came top with 40% of respondents followed by home contents at 23%. Mortgage repayments lagged well behind at 11%.

This is worrying, especially in light of unemployment and repossessions climbing. Figures from the Office for National Statistics show unemployment climbed by 27,000 to 1.71 million in the three months to September, the highest level in seven years. The number of homes being repossessed reached 8,140 in the first six months of this year – the highest since 2001.

The results of the Bright Grey survey reinforce the view that the protection gap is unlikely to be reduced any time soon.

Bad press about people being ripped off by payment protection insurance has not helped and, following investigations by the Financial Services Authority and the Office of Fair Trading, the latter is expected to refer the market to the Competition Commission.

But MPPI has fared better than PPI with the FSA saying it has found no problems with MPPI when taken out with mortgages.

Meanwhile, a broker near Edinburgh is getting involved in the managed currency mortgage market managed by specialist ECU. This aims to reduce the size of a client’s debt by borrowing in currencies which fall in value against sterling and reduce the cost of servicing debt by borrowing in currencies which have a lower interest rate than sterling.

ECU says that for clients the combined benefits of debt reduction and cumulative interest savings since 1988 are now large enough not only to pay off loans taken out in 1988 but also to have generated a cash surplus. It soundsa complicated set-up and probably won’t suit everyone but it’s worth looking at as an option. (Celtic won 1-0 – ed)

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