There is no legal obligation to have Life Insurance when applying for, or having a mortgage. However, some lenders will only consider your application if you do have it. It makes sense that the bank knows they can recoup the money for the mortgage if you were to pass away. The life insurance policy also ensures that you do not leave the mortgage debt to a loved one.
Buying a home with someone else
Making the jump to buying a house with someone is a big commitment, your finances will be tied with your partners for the lifetime of the mortgage. If the unthinkable was to happen and one of you was to pass away, then the remaining will be liable for the entire mortgage repayments. Now this may be unaffordable on a single wage, the sensible thing to do is to take out life insurance so that on the off chance that one of you were to pass then the mortgage would be paid off in full and the remaining partner would own the house outright.
Life Insurance as a Landlord
Whether you are a single property landlord or own a portfolio what happens to your properties when you die, if you have a mortgage against them, depends on the lender. Some will demand the settlement of the mortgage immediately, whilst others will just require continued repayments.
Either way, this will leave your loved ones with a huge debt to pay. It is therefore advisable to ensure that you are covered to the value of the amount you have outstanding in mortgages.
Decreasing Term Life Insurance
The Life Insurance policy most often associated with mortgages is a decreasing term life insurance. This is the perfect product for mortgage cover as it decreases over the lifetime of the policy.
Our advisors can make sure that you are covered for the right amount, and for the right length of time ensuring that you do not pay more than you need to AND that you are covered adequately.
