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Mortgage Life Ins & Overpayments
Tabatha_Kitten
Posts: 523 Forumite
We have a Nationwide mortgage in 2 parts. Mortgage 1 is on 2.5% BMR and Mortgage 2 on a 5.78% 5yr fix due to revert to BMR in 2013.
We have been overpaying Mortgage 2 and have built up a reasonable "Overpayment Reserve" which we have been treating as one of our emergency funds because under the terms of the account this can be drawn back or used to reduce our payments should the need arise.Its listed seperately on our mortgage statement but included in the mortgage balance.
My question is though, what would happen to this overpayment reserve should one of us die. We have life insurance which I beleive is on a decreasing term payable on first death. Would the life ins pay off the outstanding mortgage balance including the overpayment of would it be taken out of the equation and the balance paid off as if we had not made those extra payments ?
We have been overpaying Mortgage 2 and have built up a reasonable "Overpayment Reserve" which we have been treating as one of our emergency funds because under the terms of the account this can be drawn back or used to reduce our payments should the need arise.Its listed seperately on our mortgage statement but included in the mortgage balance.
My question is though, what would happen to this overpayment reserve should one of us die. We have life insurance which I beleive is on a decreasing term payable on first death. Would the life ins pay off the outstanding mortgage balance including the overpayment of would it be taken out of the equation and the balance paid off as if we had not made those extra payments ?
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