Mortgage Protection & House Purchase

Depends on the percentage mortgage you get, if its high, many companies require you take it out. It is misleadingly named however, since it doesn't protect you, it protects the mortgage co in the event your house falls in value.

If you mean some form of life insurance, then No. If you mean Mortgage Indemnity type policy, then it depends on the LTV (Loan to Value). This policy is for the protection of the lender where the LTV is above 90% - though not all lenders require it, nor set it at this level.

Good intro. here -

and a couple of good DIY conveyancing books, which explain the whole process - This might be worth a try -

Daytona

So if a single applicant with no dependents obtained a 74% mortgage would they not be required to obtain any compulsary insurance; although of course it would be very advisable to obtain buildings insurance?

AFAIK, life assurance is not compulsary and the sale of the property would pay off the mortgage upon my death; I suppose it would be good to have life assurance to pay off the mortgage if I wanted to leave the house to a brother/sister?

It is almost certainly a compulsory condition of the loan that you have buildings insurance in place. What's optional is mortgage protection insurance (which is typically something you take out to benefit yourself so that your mortgage payments are made for you if you should suffer accident, sickness, or unemployment. Not to be confused with mortgage indemnity insurance which is an insurance which protects your lender against losses they incur if they repossess the property and the price they get from auctioning it off is not enough to cover the loan and arrears. This tends to be compulsory for high LTVs, and there is never any point in going for it voluntarily. Note that though the insurer indemnifies the bank, they will inherit the debt and can chase you for it.

True. It used to be the case that it was not only compulsory but that the lender required the policy to be assigned to them, but the practice has gone out of fashion.

Indeed.

Thanks!

Daytona, I'll check out this links for further information. Thanks for these.

BTW, someone was telling me that in the past a percentage of mortgage payments (or perhaps the mortgage interest) was deductible against income tax. They told me they don't think this is done now though.

Anyone know if mortgage repayments (or interest) are deductible against income tax?

Loan interest (not capital) is deductible for income tax in respect of investment properties, but for your home. MIRAS ended on 5 April 2000.

Though in that case you might suggest your sibling pays for it as its for their benefit not yours!

The words 'Mortgage protection' can either refer to insurance against your dying or getting a critical illness, or both, or it can mean protection to pay the monthly mortgage payments plus a bit if you fall ill or become redundant. The phrase gets used for either.

Most lenders do not these days require either of these as part of the deal.

If you have no dependants or spouse/partner, I would suggest that you do not need life cover because if you die the house gets repossessed to clear the debt. But you may well want critical illness cover to pay off the mortgage if you get a critical illness and don't die. This is your choice.

You may also want the payment protection so that you can maintain the payments even without an income for a year or two.

Rob Graham

Not forgetting to start it when you take on legal ownership at exchange of contracts rather then when you move in

Watch out for poor value for money products - read some of the press reviews here

from Goodfellows who seem to offer value for money policies - (I've no experience of them though, just heard them mentioned before)

I didn't require it with my 95% mortgage, so it's worth shopping around with a good comparison site like

Personally I was quite happy to cancel mine, having no defendants, when my bank changed its policy, so I think it's accepted by the mortgage companies now.

Daytona

In message , SuzySue writes

Buildings insurance would normally be compulsory.

In message , Tumbleweed writes

No, thats mortgage indemnity.

Mortgage Protection is either Decreasing Term Assurance or Accident Sickness & Unemployment Insurance. Which one depends on who says it.

Very few policies pay out for more than a year, and even then in the small print some of them count the year of payments as including the first three months when you dont get any pay out, ie you'll only get 9 payments at best. Check the policy wording *very* carefully before taking one out and consider whether you'd be better off putting some money aside each month yourself instead. From what I recall, after 2 or 3 years you are quids in compared to what you are likely to get back, especially if you manage to get a job within 6 months or so (for example, for many policies that means they'll only give you 3 payments).

You refer, of course, to payment protection policies, not anything else.

Rob

"Daytona" wrote

Eh? On my latest move, the vendor's solicitors tried to get me to implement insurance from "exchange" - but my solicitor swiftly put a stop to that. And my lender did *not* require me to get insurance until day of "completion".

Further, if between exchange & completion, (say) the vendor left the chip-pan unattended & burned the house down - wouldn't he need to re-build the house in order to "complete" properly on day of completion? Doesn't the contract basically say that, in return for the money, the vendor will supply the house as described in the particulars, on day of completion??

I got that wrong - exchange isn't legal ownership, but a legally binding contract to purchase/sell.

As a purchaser, I was told to insure from exchange by my solicitor. A quick search reveals conflicting advice on this, so it may well differ from contract to contract.

Sounds reasonable, depends upon what contract terms he signed though, and whether they would be enforceable.

Daytona

What do you mean by 'as described in the particulars'? You are buying the land with a house on it.

"john boyle" wrote

I would hope that, if there were a 5-bedroom brick-built house with double-garage on the land on the day of exchange, that the vendor couldn't get away with just providing a two-bedroom bungalow on day of completion !!

In message , Tim writes

I agree. Where does it say that in the contract of sale though?