Mortgage with no life insurance.

Gingham_Ribbon

I know a couple with no life insurance on their mortgage. It is interest only. I know they cancelled it because they said the premiums were getting too high but I'm concerned that the mortgage company will have a problem with this.

Does anyone know if this is something a mortgage company will allow or what could happen if they don't?

Thanks.

Snaggles

Hiya - some mortgage companies insist on it, some don't. If they have been able to cancel it, the mortgage company must not have had a registered interest in the policy, so they wont really ever find out the life insurance has been cancelled (unless one or both of them dies).

One potential problem would be that if one of them passed away, the other would have to take over sole responsibility for the mortgage and if it wasn't affordable, they may have to sell the house. If they both passed away at the same time, the mortgage would be paid from the estate I believe.

Nelski

Hi GR

There are no FSA requirements afaik although Im sure the seller has to show they have investigated whether there is a need in order to be compliant.

I dont have life insurance personally as my house is worth well above the mortgage and i have no dependants so there is little point imo. I have never been told I must take it out

Seems strange not to though if you have depandants

Gingham_Ribbon

Thanks both. I feel a bit less concerned on their behalf though not entirely (as I wonder how they'd each cope with the repayments on their own.)

Retired_I.F.A.

Lenders only ever had endowment policies assigned and that lasted only for a few years as it was more trouble than it was worth for them keeping them and returning them to policyholders. They have the secuity of the bricks and mota that's enough fo them

alm721

We have no life insurance, never had and have kids, but do not really need it. Weve only ever been asked about it when remortgaging as the building societys like to sell it, but no-one has ever insisted we take it out.

lisyloo

Hello,

People's circumstances vary e.g, some have dependants and some don't.
Also people's wishes vary.
For example I live in quite a large house and I would not want to stay there if I was widowed and living alone. Therefore I don't need life assurance to cover the large house as I wouldn't want to keep it.

What people need to assess it what firstly what they really NEED after first death e.g. to cater for child care and then if you can afford to do so then you consider what you would LIKE.

If you have no dependents the you might decide to take a chance and "wing it" whilst you are skint.
In my view this is perfectly acceptable IF you understand the risks you are taking. For example you may have to sell your home and move in with parents or rent.

If you wanted to cover every eventuality you'd be pretty skint after paying your insurance premiums on the other hand it's very important that dependents are considered.

Each person/couple has to choose the trade-off that's right for them.

I would not suggest skimping where dependants are involved but where the only people involved are grown-ups then it's up to them what risks they want to take (provided they have fully considered and understand the risks).