The holder of a loan or of a variable rate mortgage is the one who would greatly benefit from interest rate insurance. Generally, interest rate insurance is offered independently from the originally borrowing, and typically interest rate insurance is used as an alternative to a remortgage onto a rate which is fixed.
A simple insurance policy will protect only against any risk of the repayments beginning to rise due to the interest rates, keep in mind, however, if they payments are rising because the borrower has been defaulting on repayments then you do not qualify for insurance. There is absolutely no requirement for the insurer to be checking up on the credit status of the purchaser, nor is it required of the insurer to look into the value of any assets that are secured.
Being as there will absolutely be no arrangement necessary and there will be no valuation fees, and/or bank and legal charges means that it is actually quite a bit cheaper to opt for an insurance as opposed to having to turn to a remortgage. What the absence of credit checks, as well as valuations, means is that it is able to be made available to every holder of a variable rate loan, with no exceptions.
Now, not only will an interest rate insurance provide the holder with protection from any rising interest rates, it also will under no circumstances raise the holder’s initial pay rate. As a matter of fact, it the interest rates does fall, what the policyholder will actually see is a great benefit in the form of payments on their mortgage and/or loan that are reduced, this is especially noticeable if you compare it to a fixed rate alternative. This makes interest rate insurance beneficial for those who are taking out a loan or a mortgage rather than insurance for employers.