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Mortgage Protection issues

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  • 24-04-2012 7:26pm
    #1
    will56
    Registered Users Posts: 1,041 ✭✭✭


    My fiance and I are currently buying a house and have hit a bit of an issue with the Life assurance.
    We have gone to a few companies and they have all only offered reduced term policy for her. Our mortgage will be for 35 years and the max term life assurance we can get for her is 13/15 years but I can have a full term policy. She has a medical condition that doesnt cause any issues and should let her live a full and long life, certainly long enough to pay of the mortgage so we can't understand the short term of cover.

    Has anyone had a similar experience and how did you get on with the lender ?

    I know in the past people were able to waive the life assurance but I don't think this is an option anymore.


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    #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,705 Mod ✭✭✭✭Henry Ford III


    I've a bit of experience in this area, but have only ever seen standard rates, loaded rates (for medical and/or occupational risks), deferrals (where a short trem medical issue exists), or outright declinatures.

    I've never seen cover offered with a limited term.


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    #3
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    will56 wrote: »
    My fiance and I are currently buying a house and have hit a bit of an issue with the Life assurance.
    We have gone to a few companies and they have all only offered reduced term policy for her. Our mortgage will be for 35 years and the max term life assurance we can get for her is 13/15 years but I can have a full term policy. She has a medical condition that doesnt cause any issues and should let her live a full and long life, certainly long enough to pay of the mortgage so we can't understand the short term of cover.

    Has anyone had a similar experience and how did you get on with the lender ?

    I know in the past people were able to waive the life assurance but I don't think this is an option anymore.

    I'd suggest talking to the lender and explaining your position. They may be willing to accept her 15 yr policy if you have confirmation from an insurance company that she can't have a policy longer than that. The banks decision to waive a part of the life cover will depend on what your incomes are i.e. do you earn a similar amount or is there one main earner? Was mortgage approval more reliant on your income or hers? Do you have kids? If not, there is more chance of them waiving this for you. I'd be inclined to say the bank will be willing to proceed. I'd use the argument that in 15 yrs time the mortgage balance will have reduced significantly and maybe the projected loan amount outstanding at that time would be an amount your salary would allow you to borrow on your own? If it is and you take this approach I think they'll see the common sense behind it and allow you to waive a portion of your fiance's cover.


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    #4
    will56
    Registered Users Posts: 1,041 ✭✭✭will56


    May I ask what a deferral is ?
    The limited term policy also had a hefty loading on it


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    #5
    Liam D Ferguson
    Registered Users Posts: 542 ✭✭✭Liam D Ferguson


    As you don't mention the specifics of the ailment but have gone to a few different insurance companies, I'll assume for the moment that the 13/15 year maximum term on the policy is non-negotiable.

    Is your fiancee's income part of the mortgage application? If she doesn't have income, or if your income is sufficient to qualify for the mortgage on your own, you should be able to convince your lender to proceed with cover on you alone.

    If your fiancee's income is a significant part of the mortgage application, try this: instead of arranging reducing cover on her, arrange level cover. See if you can negotiate with your lender on the basis that the gap beyond that point would be sustainable by you alone, if she should die after her policy expires.

    If that fails, unfortunately I think you're back to looking at what you would qualify for on a 15 year mortgage, or on your own on a 35 year loan.


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    #6
    will56
    Registered Users Posts: 1,041 ✭✭✭will56


    Both our incomes are taken into consideration for the mortgage, with both being the same


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    #7
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    will56 wrote: »
    Both our incomes are taken into consideration for the mortgage, with both being the same

    What are the incomes, how much are you borrowing and over what term?


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    #8
    will56
    Registered Users Posts: 1,041 ✭✭✭will56


    Incomes are €26+27k
    We are borrowing €130k over 35 years


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    #9
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    will56 wrote: »
    Incomes are €26+27k
    We are borrowing €130k over 35 years

    In 15 yrs time your salary is sufficient to qualify you to borrow the amount outstanding in your own right. Take this approach and you'll be fine.


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