Its better to remortgage home or paid off with life insurance ?

Cindyyyy

Hi all,
i am very sorry for asking too many questions and created too many discussions in this forum. I have tried to reach few advisors and will get the answers from them too. However, I feel like I need few suggestions too. I hope anyone here can help me out. 

As I have shared before, my husband recently passed away & he gave me our residential home (in wills) as well as other estates too. Regarding our home, it still has mortgage on it to be paid off. He has life insurance and some savings too. But, I am thinking to remortgage our house and continue to pay the installment monthly till it pays off. 

I know by utilizing the savings and life insurance payout would be good solutions to clear the debt. However, I need to use the money to invest in properties (buy-to-let) to create better portfolio and the remaining is to pay off some other stuffs. I am sure I can pay off the installment of our home each months through my salary as well as income from the investments properties till it done instead of use all the funds to pay bank straight. I have no negative plans to run away from the home debt, its just I prefer to use the money for other purposes that could generate better income to continue living and for the future of my children (as they’re still studying and I have lots things to handle in coming time). 

My question is,
Is it possible to keep his savings & life insurance pay out instead of clearing off the remaining home debt to bank straight away & just remortgage the home debt and continue paying?

I would appreciate the kind response 

Thank you 🙏

SVaz

So you’ll be paying interest on your own mortgage and on buy to lets?
Doesn’t seem like a very practical plan I’m afraid.
The security of a paid for home cannot be underestimated and you can plough the money you would be paying on BTL into a pension instead along with the tax relief.
Don’t underestimate the hassle and cost of being a landlord either, not to mention the tax implications too, it’s not the gravy train it used to be. 

Keep_pedalling

Sorry but this sounds like a terrible idea. It seems you already have the bulk of your assets tied up in illiquid assets, and now you are planning to add more while retaining debt on your own home.

You don’t need to buy more property (presumably through the limited company) but you do need professional advice. I would suggest finding a local IFA to discuss your options rather than the eggs all in one basket approach. 

Malthusian

Is the life insurance policy assigned to the mortgage lender? If the answer is "yes" they will get the money in the first instance (with any surplus after repaying the mortgage coming to you). If it is not then you are not obliged to repay the mortgage specifically with the life insurance. However you may be obliged to repay the mortgage one way or the other - see below.

Whose name is the mortgage in; joint names or his only? If it was in his name only the lender can insist on the debt being repaid. To keep the mortgage, you would have to show them, or another lender, that you could afford the repayments in order to raise a mortgage in your own right.

If it was in joint names the mortgage continues as it is, as long as you can keep up the repayments. However, you may be unable to remortgage if (again) you can't show a mortgage lender that you can afford repayments; that could leave you as a mortgage prisoner on the Standard Variable Rate, which will be very expensive.

By the way it still sounds like a terrible idea, I just thought it was worth answering the questions as asked.

The point of the life insurance was to give you security on your husband's death, not to give you insecurity by making you dependent on a complex and tax-inefficient web of property investments where you are entirely reliant on tenants paying their rent to keep a roof over your own head and that of your children. Much of that risk would be taken on not for your benefit but for the benefit of HM Treasury. Residential property is the single most tax-inefficient investment available to a UK retail investor.

Cindyyyy

Thank you all for your answers

Well, after heard some of advises and the responses from this forum I think I should just repay the remaining mortgage with life insurance payout. 
I think its better than tied up with debt. 

Thank you once againe