Forced to have Mortgage term Assurance?

nickdj

Hello all,

I'm a little bit puzzled by this one and hope you can help.

A couple of years ago I bought a house through an estate agent. This was our first house and we allowed the advisor to do all the paperwork. Along with some other descrepancies (e.g. not advising the house had flooding and then cancelling the house/home insurance after it was agreed) we have not been advised correctly.

Part of the sales process was to get myself and my wife to take some insurances. One of them was a Mortgage Term Assurance.

I recently had to cancel the direct debit which prompted them to contact me for payment. It was then I was advised that if I didn't take it and keep it for 4 years I would have to pay them a fee!

This sounds a little fishy to me and I am sure the advisor said 1 year for the insurances.

I'm not really sure how a Mortgage Term Assurance works nor how it would be used. As far as I can see it's just money spent for nothing. It hasn't helped me when we were both made unemployed so I assume it's some kind of policy that pays if I die?

Can someone please explain what I am supposed to be paying for and if they can enforce this term? I have been advised it was part of the mortgage agreement, however, since the mortgage is with C&G and I'm paying for assurance through L&G am not sure. I think I have been sold something I cannot use and @ £22 per month may not be the best deal.

Can anyone help shed some light on this?
Thanks

Nick

dunstonh

A couple of years ago I bought a house through an estate agent. This was our first house and we allowed the advisor to do all the paperwork. Along with some other descrepancies (e.g. not advising the house had flooding and then cancelling the house/home insurance after it was agreed) we have not been advised correctly.

the adviser is not responsible for the requirements of the estate agent.

I recently had to cancel the direct debit which prompted them to contact me for payment. It was then I was advised that if I didn't take it and keep it for 4 years I would have to pay them a fee!

That is not an uncommon way of paying a fee.

This sounds a little fishy to me and I am sure the advisor said 1 year for the insurances.

There is no insurance that only has a 1 year clawback. 2 years at best but most are 4 years.

I'm not really sure how a Mortgage Term Assurance works nor how it would be used. As far as I can see it's just money spent for nothing. It hasn't helped me when we were both made unemployed so I assume it's some kind of policy that pays if I die?

Its life assurance. Its not unemployment insurance. You wouldnt expect your car insurance to pay out if you are unemployed. so, why expect your life assurance to? If you had unemployment insurance then that would pay out. As to its value, what if one of you dies? How would the other pay the mortgage and make up for the lost income?

Can someone please explain what I am supposed to be paying for and if they can enforce this term?

If you signed a contract that agreed to use the commission to pay the fee (as will be mandatory in many areas from 2013), then you cannot get out of your liability. If no contract was signed then they cannot enforce it. There are some agents of insurers that use this perfectly valid and good way to pay incorrectly.

The optimal way to use it is for you and the adviser to agree a fee and only commission to the value of that fee is taken (no more than that, therefore reducing the product price or giving you a rebate). This way removes any commission bias and can get you a better priced deal.

The bad way is where no fee is agreed, no agreement signed and/or they try and get all the commission off you despite the commission being higher than the fee agreed (which is actually fraud) or the clawback is pro rata on timescale (i.e. clawback after two years may be 50% of the commission not 100%).

I think I have been sold something I cannot use and @ £22 per month may not be the best deal.

Are you immortal?

lordhaldon

I'm with dunstonh on this one. I am extremely irritated by people that shout mis selling when they have had the cover. I bet you would not shout so loud if you had a cause to claim ie. you or your partner had died! You got what you wanted - the mortgage - and the adviser got paid. You should have read the T and C's, looked at what you were tying into and looked around to see if you could better the deal. I would hazard a guess and say that your eyes were on the prize of the mortgage and £22 per month is not much to pay for piece of mind. Yes you could get the £22 of life cover for less but it may not come with an agreed mortgage. You get what you pay for.