what insurance are required for a mortgage? shared of freehold?

james007ago

Hi, hope somebody can give me advice on this matter, im bit confused right now.
We are FTB and used a mortgage broker from countrywide. He is good because he doesnt charge me any instead he chaged the lender for his service. Now my question is that when we applied for mortgage, he recommends us insurance product such as life, MPPI and content insurance. I asked him if this were needed so that the lender will grant us our mortgaqge and he said that it is better to apply now for insurance as the lender will think that we are genuine??? Now, after so much thinking, I think the MPPI and content insurance are not important so Im contemplating of cancelling them. If i took out an insurance, when will I start paying for it, is it after exchange of contract or the date we applied? Because when I check my account online, there is a direct debit aboiut these 2 insurance and start date is before we started applying for mortgage. Also, how can I cancel them?
I also want to ask about shared of freehold? Can somebody clarify this to me because the flat we are buying is a leasehold with share of freehold and when i spoke to the buyer whne we viewed it, he said the freehold expired in 2971 but when the survey came it says it has only 70 years remaining in the lease. I clarified this with my solicitor and he said it has a very good lease. But what I cant understand is that why only 70 years and to whom shall I pay to extend the lease if I also have share of freehold?
Thanks for reading. Any advice welcome!
Happy xmas to all!

kinglewis

In terms of the insurance you are not required by the lender to have them.. but think carefully before you cancel. At least see an independant financial adviser and see if they can offer policies at a reduced cost.

Are you single with no dependants?? If so life cover should not have been recommended to you.

mppi... assuming this covers critical illness, sickness and redundancy... how would you pay if this happened? It's not nice losing your house when you are ill or desperately searching for new employment. But it's a risk that some are willing to take depending on your personal circumstances.

Contents insurance again is equally important.. what if you had a fire / break in? you might not have much now but your home will soon be full of personal items.. again not nice when someone loses everything and has no insurance to replace anything.

In terms of the lease.. 70 years does sound like a short lease. Although I would trust the expertise of a solicitor.. maybe ask him/her to clarify why this short term is considered a 'good' lease.

G_M

He is good because he doesnt charge me any instead he chaged the lender

This is normal - it doesn't mean he is 'good'!

The fact that he is pushing you to take out lots of insurance suggests to me he is more interested in increasing the commission he earns than in advising you! Not 'good'.

If you have a mortgage you MUST have buildings insurance (though with a flat this may be arranged for you if there is a management company for the block of flats).

Depending on what type of mortgage and which mortgage company, you MIGHT be forced to have Life or MPPI but you say:
"he said that it is better to apply now for insurance as the lender will think that we are genuine??? "
That makes me think it is NOT compulsory for this mortgage. 'Better'? Yes - better for him as he earns money for selling it to you!!!

As Kinglewis says, insurance (life, critical illness, contents, MPPI etc etc) can be helpful if you lose your job, get sick, get robbed etc etc.
But it's up to you how many possible bad things in life you want to insure against.
Got a cat? Pay for pet insurance just in case the cat gets sick!
Are you a dancer? Insure your legs in case you fall and break one!
Only you can decide where to draw the line.

Also, how can I cancel them?

Call the insurance company. There is usually a 14 day cooling off period. After that, you might be charged an admin fee for cancelling during the year.

You can, of course, simply call your bank and cancel the DD, but the insureance company could then chase you. Best to speak to them.

when i spoke to the buyer whne we viewed it, he said the freehold expired in 2971 but when the survey came it says it has only 70 years remaining in the lease.

I'm guessing you mean the seller, not the buyer?
This is confusing. Freehold does not expire. That's what freehold means. It's yours for ever (at least a share of it is).

The LEASE will expire. You need to clarify with your solicitor if the lease expires in 2971 (VERY unlikely), or in 70 years.

My guess is that the lease perhaps STARTED in 1971?? If it was a 99 year lease it would have 63 years remaining.

63 or 70 years is relatively normal. Many leases are 99 years - so if a flat gets sold every few years the remaining lease will be less each time. (eg sold 5 times after 5 years each time so remaining lease is 99-25 = 76). Of course the longer your lease the better, and once a lease gets below 50/60 years it gets harder to sell.

Lots of information here about how to extend your lease or buy the freehold.

Doozergirl

The surveyor may not know the length of the lease himself - he may just put 70 years as a presumption to base his valuation on. He certainly will not have had sight of the lease himself. I'd trust your solcitor way more than a surveyor on the length of lease - just ask your solicitor outright. It's completely normal to extend the lease to 999 years when purchasing the freehold so I'm not sure why G_M thinks it is VERY unlikely - also leases of 63 or 70 years are not good things when associated with pure leasehold flats; not nearly as much with freehold but the simple way of getting around this one is:
a) check the length of the lease with your solicitor
b) if it isn't a very long lease then ask for the lease to be extended as a condition of sale - it should be just a formality!

Richard_Webster

but when the survey came it says it has only 70 years remaining in the lease.

The surveyor may not know the length of the lease himself - he may just put 70 years as a presumption to base his valuation on. He certainly will not have had sight of the lease himself. I'd trust your solcitor way more than a surveyor on the length of lease - just ask your solicitor outright. It's completely normal to extend the lease to 999 years when purchasing the freehold so I'm not sure why G_M thinks it is VERY unlikely - also leases of 63 or 70 years are not good things when associated with pure leasehold flats; not nearly as much with freehold but the simple way of getting around this one is:
a) check the length of the lease with your solicitor
b) if it isn't a very long lease then ask for the lease to be extended as a condition of sale - it should be just a formality!

I agree with Doozergirl. It is very likely that the surveyor simply assumed that the lease was at least 70 years when making his valuation. Lease lengths are not normally known to surveyors - many sellers don't know how long their lease is!

james007ago

I contacted my solicitor and got clarifications. She said the house was built in 1972 and has 999 years from then so all in all it lease expires in 2971. The flat has also a share of freehold.
I work in the NHS and we have a brilliant pay in terms of being made redundant or sick and have a saving which could cover 1 year to pay mortgage anyway. Thanks for all your advice.
I have another question though! When I spoke to the seller, I said Im willing to pay 175k so I wont pay for the Stamp duty however seems like I have to now so is it possible to renegotiate the price and to whom shall I contact? Im willing to pay £173,250 for it (subtracting the 1750 Im going to pay for SD). Do you think this will be a deal breaker? The asking price of the propert is £177,000.
Need urgent advice again! Thank you.

james007ago

Is there any way I will not pay stamp duty?

Doozergirl

The only way you will not pay SDLT is by paying £125,000 or less.

Whether renegotiating the price is a deal breaker is up to your vendor. If you put in the offer 2 weeks ago expecting not pay SDLT then I'd be a bit miffed, less suprised if this has been dragging on for a couple of months.