UK Landlord Forum / Life

Homeowners on variable rate mortgages are being offered insurance to protect them against any future rises in interest rates.

The MarketGuard interest rate insurance policy offers protection against rises in the Bank of England base rate to anyone on, or switching to, a standard variable rate or tracker mortgage.

The policyholder chooses an insured rate - either 1%, 1.5%, 2% or 2.5% above the Bank of England's interest rate and the policyholder's mortgage rate at the time.

If both of these rise by more than the chosen rate the insurance will start paying out, giving the policyholder cash to help meet the higher mortgage repayments.

Someone with 20 years left on a £150,000 mortgage who wanted to insure themselves against a rise in the bank base rate of more than 1% would pay £62 a month on a repayment mortgage, or £85 a month on an interest-only deal.

To insure against a 2% rise the same mortgage holder would pay £26 a month on a repayment deal, or £35 a month on an interest-only deal.

However, there are a lot of if's and but's (predictable). The policy only runs for two years at a time and premiums have to be paid upfront, so a homeowner insuring a £150,000 repayment deal against a 1% rate rise would have to stump up £1,488.

If the policy is cancelled at any stage during the two years, 30% of the total cost of the policy is held back as a fee.


More details here