Homeowners call on mortgage advisers to talk about redundancy

Homeowners overwhelmingly want their mortgage advisers to raise the risk of redundancy, but few do, according to new research from Walsham Brothers.

The survey found that eight in ten (81%) homeowners say mortgage advisers should routinely discuss how customers would manage their mortgage payments if they become unemployed.

This comes at a time of significant concern about the risk of redundancy. Three in five (58%) respondents saying they expect redundancy risk to increase within the next five years, rising to 61% of Generation X (ages 46-61) and 63% of Boomers (ages 62-80).

Yet, among those respondents who have used or arranged a mortgage, only 26% recall their adviser having that conversation. That said, 23% said they couldn’t remember and 20% didn’t use a mortgage adviser.

Meanwhile, the findings also reveal a lack of awareness of all the relevant protection options available. In particular, almost three in five (56%) said they weren’t aware that insurance covering involuntary redundancy/unemployment could be purchased on its own, without accident or sickness cover.

Only 10% have insurance to protect their income and payments if they were made redundant. And of those who had considered taking out redundancy cover but decided against it, cost represented the main barrier (32%), followed by ‘didn’t think I needed it’ (17%).

Today’s findings come at a time when a third of UK employers are predicted to implement staff redundancies by January 2027.

Jamie Leong, senior manager of product and propositions at Walsham Brothers, commented: “Consumers have told us they want advisers to highlight the risk of redundancy to them, at a time when that risk feels very real. But few recall this happening; either clear that it didn’t, or not clear either way. Plus, a fifth simply didn’t use a mortgage adviser.

“There are educational and awareness needs on many levels here; from the value of taking advice when making a home purchase – probably the biggest purchase we make it our lifetime – to advisers discussing all risks, grounding them in reality and making it clear that redundancy cover is low-cost. For example, a 38-year-old could expect to pay £23.67 a month for £1,500pm benefit.

“At a time when the FCA’s Pure Protection Market Study is helping shine a light on accessibility, we all need to be looking at consistent and innovative ways to close the protection gap for the three fifths (59%) of people who have never considered their protection needs. Some cover is always better than none. And cover for a risk that’s not included as part of traditional income protection – in other words, redundancy – could arguably be considered an essential for all.”