mortgage & insurance help

Gemma1982_2

Hi, I've owned my house for a year now and all I have is buildings and contents insurance. My fiance lives with me & the only reason he is not on my mortgage is because he has bad debt from being in the army - he is currently in a Scottish trust-deed & is repaying his debt - this is being set up for 3 years & he's been paying it now for about 5 months.

Firstly, I'm not sure what the best insurance is to take? I'm not wanting anything to happen to me & he's left with nothing due to the fact he's not on the mortgage. Is there something I can set up for him?

Secondly, I need to remortgage July next year & am I best keeping him off the mortgage or will anyone look at him as he's repaying his debt? I don't want to go on a higher interest rate. I'm getting married October next year & although I've not got any accounts or linked debt with him & I'm worried when I take on his name I'm going to be affected by his debt. Should I take a 5year fixed rate in my name? & then when I change my name tell the lender but say I'm not including him on the mortgage. Will they want to know why he's not on it? If I tell them will this affect me?

I bought my house for £80,000 from my friend - it's worth £85,000-£90,000. I'm on £16,308 per year & my mortgage was for £68,000 originally. I'm due a bonus of £1,000 in June next year, then my pay will go up in July by about a further £1,000. My partner earns more than me.

Thanks for any help. I'm a mortgage underwriter my self - but don't know all the answers. I know I could get a mortgage, just don't know about my fiance.

koexelek

Most important thing to do is make a will.
If you died now, everything would go to your nest of kin, and he would get nothing.

if you want to insure yourself against death, you could take out a policy on your own life and put the proceeds " in trust" to your partner.
He could do that too, if you wanted it the other way round.
Alternatively, you could have a joint life, first death policy. If either of you died it would pay out to the survivor.

Even if the mortgage is not joint, any protection policies can be.

remortgage wise, I would say it is best to keep it in your name if your partners record still is not good. In the current climate a lot of lenders are crucifying people on interest rates who have only had minor credit problems.

getting married and changing your name should not cause a problem. Thankfully credit searches are far more sophisticated these days and go on the individual person, not the family or house.

On your income, you should be OK to support the mortgage on your own wage.

opinions4u

Insurance wise, don't just think in terms of the mortgage, think in terms of the lifestyle that will be lost if something unfortunate happens.

What income would be lost? What bills would reduce with only one to feed?

The suggestion of making a will is absolutely vital when co-habiting. Do you want your other half made homeless if the house reverts to the ownership of your parents? Don't put your parents in a position where they have that decision to make!

Remortgage wise, I'd suggest you keep things in your name in the current climate to keep the rate down. Explain this to the solicitor when making your wills, and he will discuss how best to protect your home in the case of one or the other popping their clogs!

Protection to consider:

1) Life cover - what cover do your employers give you? How many other debts do you have? How much do you rely on the other person's income?

2) Critical Illness cover - similar questions to above. Can often be added to a life policy quite cheaply and pays out in the case of severe illnesses (e.g. life threatening cancer etc).

3) PHI - something that would replace your income if you're unable to work, paying out a fixed amount until you return to work.

4) PPI - something that pays your loans for you in the case of accident, illness or redundancy (often expensive, I prefer PHI because it can be tailored to your circumstances and built around you employer's benefits, but PHI doesn't cover redundancy).

Not saying you should have all this cover, but I'd say it's worth seeing a reputable solicitor to make a will (£120ish) and an IFA to sort out protection that fits your circumstances - and budget.

getmore4less

For life cover, I think you have to ask what will he do if you died.

If he would not want to live in the place(army moves say) then there is nothing to cover really. if he would and cannot afford to keep the place then some cover would make sense, he can take out a policy to cover your life.

As for your assets and house equity that is independant of any mortgages etc, you just need to say what you want to hapen to them.

Critical illness and long term illness are ususaly more significant/important since this is where you want to keep the place and have some income.