interest only- life assurance help please?

arwalder

My mother in law hasan interest only mortgage with the Principality she has life assurance to coverthe sum lent, is having this type of insurance a condition on an interest onlymortgage?

The cost of theinsurance per month is quite high due to her age and the sum insured so waswondering with no dependants and little equity in the house is she better offwithout it?

If she does not havethe cover what would happen to the house when she passes away?

Any advice please?

GMS

There is no requirement for life insurance but is she dies with a mortgage still owing then the property would need to be sold to repay the lender or a family member take a mortgage to repay the lender.

As a separate issue does she have any plan to repay the capital amount? Without this she will find herself needing to sell when the term ends

arwalder

This is the problem there is no vehicle in place for her torepay the mortgage at the end of the term. The house has been on the market for3 years now – with no offers, the house is in good condition the price has beenreduced but really is now as low as she can go. Due to the market she has effectively lost all her equity and with thecharges even if she does manage to sell will come out worse off.

I must admit I amunsure of the term of the mortgage as I don’t have the paperwork here but knowshe is on a fixed rate until July 2013. The ERC’s are high but she has just hadenough. As a pensioner she has to work full time to keep up the mortgage payments.