Mortgage

Your mortgage lender does not say ‘Goodbye’ if one of you might die!

At Full Circle Financial Services Limited we have seen a considerable increase in enquiries in recent weeks and recent developments – including the tax rebate of up to € 20,000 for first time buyers which can go a long way to meeting the deposit – has certainly resulted in more opportunity for buyers.  Full Circle Financial Services Limited offer a full mortgage service.  Our website offers further information – see “Product & Services” / Mortgages

This article addresses the requirement by your Provider for Mortgage Related Life Cover.

….unfortunately the death of a spouse / partner does not result in your lender sending you a condolence card letting you off the rest of your mortgage debt!

There are a number of conditions associated with any formal loan offer but one of the key requirements that often gets treated less urgently – then it should do – is the requirement  to put life cover in place to repay the outstanding loan balance if one of you should die (or indeed suffer a critical illness) during the mortgage term.

If there are two applicants named on the mortgage application both lives must be insured on the life assurance plan.

There are a number of different life assurance products but if your mortgage is a ‘capital and interest’  – where you pay down some of the capital each month – the lender will require you to take out a Mortgage Protection Plan – this is the cheapest form of life cover and is a ‘no frills’ plan which is designed to pay off the mortgage on the death of either applicant during the term.

There are more expensive products but this is the ONLY product you require for mortgage purposes.  Your Lender is likely to offer one of their available products but it always best to have access to many product providers to ensure the best possible outcome.

On a separate note we would always recommend that you buy ‘family related life cover’ as a separate policy from Mortgage Related Cover and AVOID the common mistake of bundling these two requirements together under one policy – we see this approach a lot!

(We would be pleased to explain in more detail – on request – why we strongly advocate separate policies for “mortgage cover” and “family life cover”)

Protection

  • The initial level of life cover should match your mortgage amount and the plan term should match your mortgage term.
  • In the case of joint applicants the benefit is paid in the event of the first of you to die (within the plan term).
  • You can also add serious illness cover but this is not a requirement of the lender and of course it does increase the cost of the plan.

Logistics then:- Once you have made an offer on a property (and price agreed) you might have upwards of 6 / 8 weeks before you can expect to draw down your mortgage cheque.  This seems like a relatively long time get things sorted but you should get going on the life assurance application as soon as you can – to ensure there are no unnecessary delays as you approach your mortgage closing date.

The first step is to contact a Financial Broker and they will look at all the products available to them and will provide you with specific quotations –

Price is a key factor but there will be others which might include the addition of other value benefits (less medical underwriting / children’s life cover / discounted premiums / one month’s free life cover etc…)

You will be asked to complete a Life Assurance Application Form which captures your personal details, the details of the cover required and your medical history.

In some instances – many applications will not require any medicals – the product provider may write directly to your GP or have you complete a medical (at their expense not yours – even if you do not proceed!) and this can take a little time – hence it is IMPORTANT to start the application process well before you need your cover to commence – to ensure that all this legwork can be completed in good time.

Once all the legwork has been completed we then secure ‘Acceptance Terms’ from the product provider and then we can ‘put the plan on ice’ until such time as the mortgage cheque is to be drawn down.  We will then ensure the policy documentation is delivered to your Lender / Solicitor as required ensuring you can tick this requirement off the list in good time.

The cost of life cover is very competitive at present – with many of the leading product providers offering very attractive discounts on top of the best market price.

Example

A couple seeking mortgage related life cover for a mortgage amount of € 370,000 over 25 years costs as little as € 31.03  **

** Male and Female both aged 36 next birthday neither of whom smoke.  Plan set up on a joint life first death basis.  Initial life cover of € 370,000 reducing in line with a 6% mortgage repayment schedule over 25 years.  Standard Rates apply and the premium reflects current discounts in the market place (February 2017)

If you are currently a mortgage holder chances are you already have a Mortgage Protection policy – as part of your offer terms.  It is worth having us review your existing plan as we can potentially secure savings on this policy.

Please feel free to email us below if you would like to have us arrange a mortgage / mortgage related life cover and or review your existing life assurance plans.

If you would like to discuss this type of cover in more detail or any other financial areas that may be of interest to you don’t hesitate to contact us at Full Circle Financial Services Limited where we would be very pleased to help you.

 

Email:- Info@fcfinancial.ie

Website:-  www.fcfinancial.ie

Contact Number:- 01 2530060