Redundancy is a major concern for workers across all industries. Even if the economy is growing and looking robust, unexpected hiccups can cause businesses to stumble and force them to lay off a number of workers. Inevitably, redundancy will have a major impact on the financial situation of anyone who suddenly finds themselves without a job.
As Money Saving Expert says, “Redundancy brings many pressures; worries over mortgage payments, fears of finances falling apart, the stress of job-finding or strain on a relationship.” Planning for the eventuality, and understanding what redundancy would mean for your mortgage, will help you cope if you ever find yourself suddenly out of work.
Do I need to tell my lender I’ve been made redundant?
This is often one of the first questions homeowners ask when they’ve been made redundant. If your mortgage is already up and running, and you’re sure that you can meet your monthly repayments, you’re not obliged to tell your lender about your change in circumstance. However, if you’re not sure you’ll be able to afford your instalments, you should inform your mortgage provider as soon as possible. Most lenders will be more sympathetic if you talk to them as soon as your circumstances change. In some cases, your bank may be able to offer you a more flexible repayment schedule to help you cope financially with your redundancy.
If you’re made redundant before your mortgage has been finalised, you’ll need to tell your lender straight away. Although it may well impact on your chances of securing a loan, it’s important that you tell your provider the whole truth about your financial circumstances during the application process.
If you’ve worked in your current job for at least two years, you’ll qualify for statutory redundancy pay. The amount you’ll receive will vary depending on your age, the number of years you’ve worked for your employer and your weekly wage. Some companies may offer extra payouts on top of the required compensation to help you cope financially when you’re out of work.
Insuring against redundancy
If you haven’t yet been made redundant, there are certain steps you can take to protect yourself financially if you do lose your job. One of the best ways to limit your exposure is to take out mortgage payment protection insurance. This type of insurance kicks in when you’re made redundant and covers your repayments for a set period of time. Payment protection insurance and short-term income protection insurance may also be beneficial if you suddenly find yourself out of work.
If you’d like to find out more about protecting yourself against redundancy, or find out more about applying for a mortgage, give us a call and speak to one of the expert members of our team today.
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Written by: Andrew Page