Do I need mortgage protection?
Buying a house is likely to be one of the biggest financial commitments you’ll ever make. When thinking about if you need mortgage protection or not, consider:
- Your family - what would happen to your home if something bad happened to you, will your family be able to keep up payments and thereby a roof over their heads? With insurance, they could pay off the outstanding mortgage and keep the house
- Most mortgage providers will strongly recommend you take out mortgage protection insurance
- Should you become ill and not be able to work, will you be able to pay your mortgage repayments?
How does mortgage life insurance work?
Once you’ve bought mortgage protection:
- You’ll pay monthly premiums for a fixed period (usually the mortgage term)
- As you pay off your mortgage, the amount of insurance cover you have decreases in line with the mortgage balance
Is mortgage protection the same as life insurance?
Mortgage protection insurance is a type of life insurance, specifically designed to make sure their family can keep their home if something bad were to happen.
What happens to my mortgage if I die?
If you die and your mortgage loan hasn't ended, the debt still needs settling. If you have an insurance policy in place, this will pay out and pay off the outstanding amount.
If you have whole of life insurance or term life insurance, your family will receive a tax-free lump sum. They can then use this money to pay off your mortgage should they want to keep the house.
Who is responsible for mortgage payments after death?
When someone dies, the mortgage (and any other debts) still needs to be paid off. In most instances the executor of the estate usually arranges and pays these debts off.
Is life insurance compulsory with a mortgage?
No, legally you do not have to take out life insurance but it is highly recommended by many mortgage providers.