Insurance when mortgage term changes

Farel01

Hi guys,

Quick question; I changed my mortgage term from 25 years to 5 years as we had a windfall and increase in income. Do I need to change the terms of my decreasing mortgage insurance as well, or keep it to the 25 years? Or would I be best off to cancel the insurance and get a new one? The guy who arranged all of this is no longer in that business so I can't ask him unfortunately.

Thanks!

newbie1980

i never understood why anyone would take out a decreasing insurance

if i were you i woud enquire how much a standard life insurance is and if its not much dearer than the decreasing one i would just swap it over

you then have cover after you mortgage is paid off

silvercar

i never understood why anyone would take out a decreasing insurance

If the sole purpose of the insurance was to always clear the mortgage and the mortgage was repayment, the outstanding amount would be falling over time. Decreasing insurance should be cheaper than standard level insurance.

OP, if the purpose is only to cover the mortgage, it may be worth getting a quote for the new level of cover you need. If it doesn't save you money, then you could just keep the existing insurance going until the mortgage is paid off.

Don't worry about changing the length of the policy, once you stop paying the premiums cover will cease.

Premiums are based broadly on your age, so you may find it cheaper not to make changes at this point.

Farel01

newbie1980 wrote: »

i never understood why anyone would take out a decreasing insurance

if i were you i woud enquire how much a standard life insurance is and if its not much dearer than the decreasing one i would just swap it over

you then have cover after you mortgage is paid off

We had to have some life insurance when we took out the mortgage. This was advised and as my OH has a chronic medical condition we were a little limited in options. I must admit with all that was going on at the time I didn't look to deeply into it. We have life insurance both of us through our jobs so was thinking of cancelling it altogether.

The insurance is solely to cover the other in case of death of one of us. Say I drop dead in 2 years, the cover will still pay out as if my mortgage was the same correct? If that's the case I could keep it until I pay it off...

It's about £50 a month through Zurich.