What will happen in this instance with no insurance?

Dave2018

Hi

I've been thinking lately about not bothering with life and critical illness cover to commence along with my mortgage, which is due to start very soon. I'm worried about the fact that I'm invested in a house at the moment and about how that will affect things should the worst come to the worst.

My mother and I bought the house cash and it belonged to both of us. When I started looking for a mortgage for a place of my own, however, the banks wouldn't give me the amount I needed while I still half-owned the house I had already bought so I arranged with the solicitor that I'm only invested in the house and not responsible for it's upkeep. I now have a mortgage deal, and am due to move into my first property very soon. However, should the property be sold, I'm entitled to half the money. I should also mention that my mother intends to leave the house to my sister in her will.

Now, if events occur that mean I'm unable to pay my mortgage, I'm not insured and the banks come after me, would they come after the money I have tied up in the house, even though my mother owns it? Neither the bank or the solicitor seem able to give me a straight answer to this, so I need to know if by not having insurance, I'm putting my own family at risk.

enthusiasticsaver

If you are unable to pay your mortgage the security your lender holds is your mortgaged property. They cannot go after the house you and your mother bought for cash as that is not their security. If you die presumably the house can be sold to pay off the mortgage although if you are relatively young and have no health issues decreasing term assurance is quite cheap. This would secure the property if you get married or have a live in partner. Save up an emergency fund to cope if you are unable to work.

Do you have an occupational pension through work? That should have life cover included.

gj373

If you default on the mortgage and it ends with repossession then the mortgage company will attempt to sell the house to recover their funds. If there is a shortfall from the sale then the mortgage company will seek to recover the shortfall from you.