Have you ever heard of the term “PPI”? Whether you have heard of it or not, chances are that you are paying it! The most common form of PPI (payment protection insurance, also referred to as PMI – payment mortgage insurance) is on a home loan. If you make a down-payment of less than 20% of your home value, then the bank will almost certainly require you to agree to PPI payments each month. These payments are a sort of insurance policy for the bank. Your extra payments are padding their pockets in the event that you default on your loan and the house is no longer valued at the amount it once was. From their viewpoint, they hope that the additional payments will insure that they will not lose money on your loan. While these payments are often not all that large (typically £100 or less), they sure can add up over the course of a few years.
So How Can You Get Rid of These Additional Payments?
Not only are you making interest payments on your loans, but the bank has you paying these PPI payments as well, which is causing you to stay broke. In order to keep your cash in your own pocket you must learn to eliminate these senseless fees. The easiest way to eliminate the PPI is to pay off 20% of your loan. At this point, you can call your bank and ask them to kindly remove the additional PPI payments from your monthly loan amount.
The second way to remove the PPI payments on your home is to get it reappraised. If the value of your home increases, then you have just increased your equity in that home. If the equity amount is large enough, the bank may just remove the PPI payments.
What If You Have Been Making PPI Payments in Error?
It happens all too often that the bank somehow forgets to remove your PPI payments from your loan, or that they have you making those additional payments when you never needed to in the first place! If you suspect that you are making PPI payments out of error, contact a PPI claims company and they can assist you in recouping your lost money (plus interest at times). The below infographic may assist you in your discovery of your accidental PPI payments.