Insurance for mortgages

cheekymonkeb0y

Hi All,

At a recent mortgage appointment, I relaised that i needed cover.

HSBC discussed 4 types of things to cover:

Life
Sickness
Trauma
Unemployment

Which one do you legally need if taking out a mortgage and also is it cheaper if you don't take the ones offered by lenders?

If so, who is best to get this from?

Cheers,

J

dunstonh

If so, who is best to get this from?

Banks are the most expensive distribution channels. So, you shouldnt use an HSBC sales rep. If you want advice and want the best in the market then you should see a local IFA. If you are capable of DIY and dont mind a limited panel then there are few IFAs that have a non-advice execution only basis that is cheap. However, you need to put everything in place and decide what types you need.

kingstreet

Do not buy anything from a bank. Their products are mostly poor and over-priced. See an IFA and get access to the whole market.

You are probably only legally bound to purchase buildings insurance to protect the lender's risk. Other things are optional and should be bought based on your needs.

funky1471

Do you need any life or buildings cover BEFORE your full application can be accepted?

I have a quote for buildings and contents insurance but obviously haven't signed up to anything yet, as why would I insure it before I own it?

Do I need to get this done and send details over to the bank to get my final decision back? - Just provided them with the relevant statements,P60, Payslips etc today.

cheekymonkeb0y

funky1471 wrote: »

Do you need any life or buildings cover BEFORE your full application can be accepted?

I have a quote for buildings and contents insurance but obviously haven't signed up to anything yet, as why would I insure it before I own it?

Do I need to get this done and send details over to the bank to get my final decision back? - Just provided them with the relevant statements,P60, Payslips etc today.

So did I so we are in same boat.

Chin

funky1471 wrote: »

Do you need any life or buildings cover BEFORE your full application can be accepted?

My lender tried to push me towards life insurance/critical illness and were giving me the impression they wouldnt proceed with my application without it.

I was just firm and said I'll sort it out myself in my own time and understand the risks involved.

re buildings insurance, you don't need to take this before the application can be accepted as you don't own the property yet.

dkmax_2

cheekymonkeb0y wrote: »

Which one do you legally need if taking out a mortgage and also is it cheaper if you don't take the ones offered by lenders?

You don't legally need any of it although some form of cover might be stipulated by a lender as a condition of a loan. My experience with HSBC is that they are asking you about these as it is an opportunity to sell you products, not because they need to be satisfied that provision is in place.

Bear in mind that your pension scheme (if you have one) may protect you in terms of death-in-service and other benefits.

If I remember correctly the HSBC mortgage T&Cs require that the mortgage be fully paid up upon the death of any mortgagor in the case of a joint mortgage.

dkmax_2

Chin wrote: »

I was just firm and said I'll sort it out myself in my own time and understand the risks involved.

That's the way to handle them! Alternatively, I came well prepared and had all the protection that I deemed necessary already in place, i.e. prior to the mortgage application.

muh3

funky1471 wrote: »

Do you need any life or buildings cover BEFORE your full application can be accepted?

I have a quote for buildings and contents insurance but obviously haven't signed up to anything yet, as why would I insure it before I own it?

Do I need to get this done and send details over to the bank to get my final decision back? - Just provided them with the relevant statements,P60, Payslips etc today.

I'm in the same process, if I understood right you just pass the quote reference to your solicitor and they sort out that you are covered from the day you exchanged.

kingstreet

I do my clients' buildings & contents insurance a couple of weeks before exchange with a start date of "TBA." The insurers will fax details of the cover to the solicitor if needed and the policy is put in force with a phone call on exchange day when the solicitor confirms it's needed. Contents cover starts on completion day, unless the client needs something different.

herbiesjp

Only legal requirement is buildings cover. And then is you are buying a flat you may find it is covered by the service charges anyway.

All the others are optional.

No pressure can be applied to you to take these out - if they do, you can always set up and then cancel straight away.

Which ones are important will depend on your own individual situation though.