With millions behind on their household bills, UK bill payers need to consider how they would cope if they were to lose their income due to illness or injury.
Research released this month by price comparison site, uSwitch, found that 4 million households in the UK are in debt to their energy supplier, while a further 2.6 million are struggling to pay monthly bills.
We're hearing more and more about how people are living beyond their means, and spending more than they have each month - but what if you didn't even have your current income?
For many people in the UK, their monthly salary is already not enough to cover the amount that they need to pay out each month.
But not even careful financial planning cannot take into account unexpected income loss from having to take long-term sick leave.
No one likes to think about having an accident, but these latest statistics should be a stark warning to everyone who has bills to pay and debt repayments to make each month to think about protecting their income.
After all, if you're already stretching what you have to the limit each month, how are you going to meet your financial obligations if what you have coming in is severely reduced?
Income protection is a simple solution – and one that is like having your sick pay last the length of your mortgage instead of its current limited time.
If this was something that was of interest feel free to get in touch (mark@themortgagemonkey.co.uk)
The FCA has hit out at lenders failing to use the transitional arrangements it introduced under the Mortgage Market Review to waive affordability checks for existing borrowers and instead keeping them on more expensive SVRs.
Speaking recently, FCA mortgage and mutuals sector manager Lynda Blackwell said that transitional provisions had been put in place under the MMR that did not require lenders to undertake an affordability assessment on product switches where no additional money is being borrowed.
The transitional arrangements apply when borrowers do not increase the mortgage amount and have a good payment history.
The original intention of the transitional arrangements was to help existing borrowers who had become unfairly trapped with their lender due to the fact that the MMR rules introduced after they had committed to a mortgage.
Without the transitional arrangements many existing borrowers would potentially have been prevented from moving or transferring to a better deal.
But Blackwell says the FCA has heard of cases where borrowers are being refused the option of moving to a fixed rate on affordability grounds and then having to remain on the lender’s more expensive SVR.
She says: ”That is not what the MMR says. It is disappointing to see this happening because lenders have wanted flexibility with the transitional arrangements. In the future it would be really good to see lenders approaching this in the spirit intended and using the transitional provisions to help out those borrowers who need to move home, who want a better rate, but who find themselves trapped because of tighter criteria and stricter affordability checks.”
