Mortgage Protection

anonymous08

Mortgage potection is not compulsory in the U.K. from what i can see so why is it compulsory here.

The bank has the deeds and the buyer has to pay 10% in minimum so why is there a need for this here.

There is enough red tape and messing about in getting a mortgage without having to be putting this in place.

From what i can see the main beneficiaries of it are the banks and the insurance companies

ANXIOUS

It's not compulsory in certain circumstances it's not needed. It's generally the cheapest form of assurance, I'd imagine the idea was brought it for couples buying a property and if one life passed away and the surviving life couldn't afford the mortgage payments they wouldnt be turfed out.

Henry Ford III

ANXIOUS wrote: »

It's not compulsory in certain circumstances it's not needed. It's generally the cheapest form of assurance, I'd imagine the idea was brought it for couples buying a property and if one life passed away and the surviving life couldn't afford the mortgage payments they wouldnt be turfed out.

Cheap yes, but it's relatively poor value too.

The sum assured reduces over the term to moirror the outsanding debt, but the premium doesn't.

ANXIOUS

Henry Ford III wrote: »

Cheap yes, but it's relatively poor value too.

The sum assured reduces over the term to moirror the outsanding debt, but the premium doesn't.

That's why barring any health issues you should change it as frequently as you can get cheaper cover.

Henry Ford III

ANXIOUS wrote: »

That's why barring any health issues you should change it as frequently as you can get cheaper cover.

That's mad Ted. The Central Bank would have issues with anyone who advised a client do that I'd say.

So a year shorter term wise, but a year older with a slightly reduced debt.....Good for the broker in commissions but can't be best advise surely?

adox

It was one of things I factored in when deciding to pay off my mortgage early.

Paying it off 13 years early was going to save me around €5000 in mortgage protection payments alone. This was the most basic of cover,nothing to show for it at the end of it.

ANXIOUS

Henry Ford III wrote: »

That's mad Ted. The Central Bank would have issues with anyone who advised a client do that I'd say.

So a year shorter term wise, but a year older with a slightly reduced debt.....Good for the broker in commissions but can't be best advise surely?

If you can get the same cover cheaper why would you pay more?

You need to keep yourself aware of the current offers For example Aviva and their price match plus an additional 10% off last year and then Zurich ran something similar. Mortgage protection and section 72 are two of the most profitable protection products for life offices.

An advisor probably has 7 year claw back unless frontloaded for less.

Fanny Wank

Henry Ford III wrote: »

Cheap yes, but it's relatively poor value too.

The sum assured reduces over the term to moirror the outsanding debt, but the premium doesn't.

But the premium at the start of the policy isn't "enough" to cover the sum insured. It "averages out" over the lifetime of the loan

notharrypotter

anonymous08 wrote: »

The bank has the deeds and the buyer has to pay 10% in minimum so why is there a need for this here.

Because should you die the mortgage is paid and at present its rather difficult for banks to re-poss a family home so they want their investment covered.

From what i can see the main beneficiaries of it are the banks and the insurance companies

Nope the main beneficiaries are your surviving family.

4ensic15

anonymous08 wrote: »

Mortgage potection is not compulsory in the U.K. from what i can see so why is it compulsory here.

The bank has the deeds and the buyer has to pay 10% in minimum so why is there a need for this here.

There is enough red tape and messing about in getting a mortgage without having to be putting this in place.

From what i can see the main beneficiaries of it are the banks and the insurance companies

If one of the mortgagors dies, they will no longer be earning and the survivor may have higher costs e.g childcare after the death. The cost of the funeral will also arise. The likelihood is that arrears will begin to accrue and the 10% equity will soon be gone. The bank will then be trying to throw a widowed individual out of a house. Bad for PR and will almost certainly involve a debt write off at some stage.

368100

Henry Ford III wrote: »

That's mad Ted. The Central Bank would have issues with anyone who advised a client do that I'd say.

So a year shorter term wise, but a year older with a slightly reduced debt.....Good for the broker in commissions but can't be best advise surely?

Central bank are all for competition in the market. Think of it as similar to moving car insurance providers.

ANXIOUS

368100 wrote: »

Central bank are all for competition in the market. Think of it as similar to moving car insurance providers.

He was alluding to churning.