TSB Mortgage Offer/Life Insurance

LondonGirl252

Hi all,


Me again. We are still waiting for our mortgage offer from TSB (fingers crossed) it is with the underwriters, our MV is hopeful we'll hear something this week.


We've also used him to get some life insurance quotes and have been recommended level life and critical illness insurance.


Is this usually something we must have in place before the mortgage and house sale can go through or is it personal preference and sensible to have? Or does it depend on the mortgage offer?


I'm thinking my partner and I need a bit more time to work out what is right for us given these exclusions


Thanks for your help.

jacobtheamish

The only insurance that is typically a condition of the mortgage is Buildings Insurance. It is your responsibility to ensure the mortgage is paid in the event of a death or serious illness. Your home may be repossessed if you do not keep up repayments on your mortgage.

Has the advisor explained why he has recommended level term as opposed to decreasing?

dunstonh

We've also used him to get some life insurance quotes and have been recommended level life and critical illness insurance.

Never use a bank. Expensive and limited options. you should use a whole of market mortgage adviser with no restrictions on insurance companies or an IFA. They will offer lower cost options and typically better coverage.

Is this usually something we must have in place before the mortgage and house sale can go through or is it personal preference and sensible to have? Or does it depend on the mortgage offer?

It is sensible to have it. Most do. (if one dies, how does the other pay for the mortgage?)

However, the recommendation doesnt seem right. A repayment mortgage would have decreasing term assurance. Not level term assurance.

LondonGirl252

Thanks both, that helps.


We have used an independent mortgage broker, sorry that wasn't v.clear, no I think just the benefit of having the larger lump sum but actually decreasing would be fine for us in hindsight.


We'll definitely make sure we're properly covered I just wanted to make sure if we wait it won't hold up the mortgage going through. We did the quote with the MB and were recommended Aviva, did some comparisons and it seemed fine but coming back from the underwriters following the medical assessment they won't offer me any critical illness only life insurance. I've found out today at work I actually have life insurance to 6x my salary through a work policy which is well over the mortgage value. in 6 months when I have a check up if I hopefully get the all clear then I can re-apply for critical illness... its only something routine and very minor but for this they have excluded me completely.


So right now it seems more sensible to get my partner covered then I'll try again when I have the right answers to their questions.

Let_Us_See

Level cover.......so an interest only mortgage?

LondonGirl252

Nope repayment, the cover is for the full mortgage value. For a repayment mortgage does this not sound right?

kingstreet

No. A repayment mortgage sees the balance reduce each year. A little in the early years and more in the later years as the capital is repaid and the interest element of each payment falls further accelerating the capital reduction.

Therefore a decreasing term assurance should be recommended to cover such a need.

Let_Us_See

Depends on what overall advice has been given. As a repayment mortgage reduces over the term it is standard practice to arrange life assurance to protect your mortgage on a decreasing term basis so it keeps track with the outstanding mortgage balance.

What justification has been given for a level term policy? Surely, not to keep a "little in reserve just in case?"

Best to have cover for your exact protection requirements and never, ever through a bank.

LondonGirl252

Ok so looks like we were talking about a product which was well above our needs anyway we don't need the cover for any other reason than to pay off the mortgage. Good to know, thanks very much for the advice.

SpeedSouth

If you do get some in place, I'd advise going to Moneyworld. Over the term we took ours, I managed to save £4,200 over the IFA quotes we had.

dimbo61

I took Level term life assurance via Cavendish online.
Worked out 50% cheaper than the same cover from the same Insurance company via my lender.
Mortgage adviser at the bank was not happy.
Cost difference between Level term and decreasing was only £1/2 a month so took Level term, are you sure you will be with same company for next 20/25 years ?