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Mortgage and insurance

User
Posted 10 Feb 2021 at 09:34

Hi everyone. Dave was recently diagnosed with prostate cancer and is awaiting surgery. We were in the process of getting a mortgage.  Will the diagnosis impact on our ability to get life insurance needed for the mortgage? If so, what do others do about this? TIA

User
Posted 10 Feb 2021 at 10:49

Your lender will not ask about your health, so you can go ahead with the mortgage. However, you now have to think about what you would do if Dave died. Getting life assurance may be difficult, I think if Dave had five years of remission behind him it would be easier, but you are at the start of the process.

So have you any other assets you could sell to clear the mortgage if you had to? Are you just prepared to take the risk and hope for the best? 

Dave

User
Posted 10 Feb 2021 at 10:54

Thank you Dave. That's what I thought.

I'd be prepared to take the risk becuase a) he's not going to die of prostate cancer and b) I have enough income to cover it if he did. But will the lenders be likely to allow that?

User
Posted 10 Feb 2021 at 13:42
Years ago, you had to take life insurance as part of your agreement with the mortgage provider but these days it doesn't seem to be mandatory with all lenders - they just want evidence of how you would pay off the loan.

We were just about to move house when John was diagnosed and our mortgage offer was withdrawn - it never entered my head that other lenders might have a different policy and the move fell through :-(

"Life can only be understood backwards; but it must be lived forwards." Soren Kierkegaard

User
Posted 10 Feb 2021 at 14:04
I'm quite surprised that the mortgage provider would be interested in how you'd pay off the loan. Isn't the house itself collateral for the loan?

Best wishes,

Chris

User
Posted 10 Feb 2021 at 16:41

Yes, I have gone through this process very recently with a large bank beginning with L. It was only a small remortgage, building insurance was mandatory, life insurance and critical illness insurance were not. The mortgage advisor asked how I would deal with each of these eventualities, I have sufficient capital elsewhere so no problems. 

I did not mention PC at all, it is none of the lenders business and would be discriminatory to ask. It would of course be an insurer's business, but as said that was irrelevant for me. 

I know the lender has the house as collateral, but they want to know how it would be paid off in an emergency, as they are not keen to be seen to throw a widow and children on the streets. As long as you have a credible and true answer to that they had no problem. 

Of course other lenders may have different policies. 

Dave

User
Posted 10 Feb 2021 at 19:56
Three daughters have all bought houses recently - none of them intended to take up life insurance. The mortgage lenders wanted written evidence of their death in service benefits from employers - two have large salaries and 7 or 10 years DIS; the third works in the NHS. She has been required to take out life insurance as a condition of the loan :-/
"Life can only be understood backwards; but it must be lived forwards." Soren Kierkegaard

 
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