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Can Lenders require Life Assurance?

mortgage deals, ideas and discussion
Tempi
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Can Lenders require Life Assurance?

#34876

Postby Tempi » February 27th, 2017, 3:28 pm

My sister and brother-in-law are looking at getting a mortgage and buying a house, having been out of the housing market for a while. My sister has some health issues and the high-street bank mortgage department has mentioned them 'needing' life assurance during their mortgage discussions.

I haven't got all the details, but whilst it may be prudent to have some cover (and I'll check to see what her death in service pension cover might be, if any), can anyone please advise as to whether this can be made a requirement by a Lender?

Many thanks

Clitheroekid
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Re: Can Lenders require Life Assurance?

#34924

Postby Clitheroekid » February 27th, 2017, 7:38 pm

Tempi wrote:My sister and brother-in-law are looking at getting a mortgage and buying a house, having been out of the housing market for a while. My sister has some health issues and the high-street bank mortgage department has mentioned them 'needing' life assurance during their mortgage discussions.

I haven't got all the details, but whilst it may be prudent to have some cover (and I'll check to see what her death in service pension cover might be, if any), can anyone please advise as to whether this can be made a requirement by a Lender?

Many thanks

Yes, it can. A lender is free to decide the terms on which it will lend money.

Having said that, I'm sure there are people who have taken out a policy to keep the lender happy but then `forgotten' to pay the premiums so that the policy lapses. Strictly speaking it would be a breach of the mortgage conditions, but I'd be surprised if a lender would bother taking any action, even assuming they were aware of it.

baldchap
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Re: Can Lenders require Life Assurance?

#34930

Postby baldchap » February 27th, 2017, 7:56 pm

I was required to take out life insurance on an offset mortgage to cover the full amount.
Nothing to do with my health conditions, and I wasn't required to use their provider.
Glad I took it out, nice to know the family wouldn't be homeless. In fact I still have it running now.

iain123
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Re: Can Lenders require Life Assurance?

#35015

Postby iain123 » February 28th, 2017, 8:23 am

Yep, fairly normal to have to take out insurance to cover the debt. Just don't take it through the lender as they are usually more expensive.

blazeboy
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Re: Can Lenders require Life Assurance?

#35089

Postby blazeboy » February 28th, 2017, 12:24 pm

This is incorrect. Lenders do not require you to take out any life insurance. It is never a mortgage condition. Obviously it is prudent to do so but it is never a condition of a mortgage offer..
The only insurance condition set out in a mortgage offer is that the property has to be insured and the lender shown as having an interest.


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