Steve21 (17th June 2013)
It is compulsory for life insurance on a mortgage now, you can't get out of it, but it does decrease the longer you are into the mortgage, so that if you die/are injured critically, you will have the house paid off, but they go through your medical file with a fine toothcomb. If I have an accident that kills me/critically wounds me because I had a migraine, it is not covered due to it being a pre-existing condition. If you have a tooth removed, they will not cover you for heart disease, because gum disease leads to heart disease etc.
As for your mortgage itself, speak to the banks in your area (or building society, they tend to give better interest rates and can/will offer a 100% mortgage if your credit record is fantastic and the value is less than £200k). Get an agreement in principle and then go to your estate agents. From there, look at the houses you like, and see if you can speak directly with the house owners also, they may be willing to sell with some furniture, which can be a good haggling tool.
Have you go an official source on that?
It would appear some lenders may take this stance but I don't think that's true.
Life insurance wasn't compulsory at least not with any of the mortgages we looked at. Mortgage advisors might convey that impression because they earn a healthy commission on selling the policies. Buildings insurance is compulsory for most but contents isn't and each lender will have its own terms I.e maximum excess. Our lenders buildings & contents quote was about 4 times the price available elsewhere.
I've not got a life insurance and got a mortgage a couple of years ago... Didn't realize it could be an issue.
The way I did it was went onto a comparison website, and worked out the most I could afford based on the deposit I had. Then I looked at properties around that price range, once I found one I was interested in I made the offer and got an agreement in principle from the cheapest provider (from their they sorted out surveys and I employed a solicitor).
The reason the estate agents might be asking is it's likely that they earn a commission is they refer you (likely to be several £££).
When we got ours, lloyds, hsbc, barclays, natwest, halifax, nationwide, santander, and alliance and leicester all said it was compulsory. Think it is an additional £21 a month for the both of us, every year it goes down £1 a month
When we were going through our mortgage application earlier this year Life Ins wasn't mentioned at all. It didn't matter anyway because we both already have it in place.
Our first mortgage was with Lloyds and we didn't have too they will suggest it as a good idea and it's upto them to lend on their terms but your original statement it misleading.
Minimum deposit, I know its done as a percentage so 10% or 15%??
Before looking at houses, it's good to know what deposit you're able to put down and talk to your bank. This should exclude Solicitor fees, Stamp Duty, Council Tax, Utility and money to live as a minimum. Looking at 'popular' housing websites online, you can then easily narrow down the selection of houses available in your price range in your area.
Buildings Insurance is mandatory, no ifs or buts about it! Without it you go against your Mortgage T & Cs! Contents Insurance is also recommended but not mandatory. If you do decide to get both, make sure you get them both from the same company. In the event of a problem, you're then dealing with one company and not two, who will try to play off each other to pay as little as possible!
Life Insurance is a requirement for some types of mortgage - especially Interest Only, as you're a much higher risk than if you're paying a Repayment Mortgage. I would still recommend it anyway, as it's a small price to pay when you consider the protection it offers your better half or your family
Minimum deposit (IMHO) should be 20% of the house value + 5% for fees (solicitors, estate agents, stamp duty).
at 20% you can have the interest down around 2-3% (depending on what was available for you), and over the years this WILL save you a nice wedge of cash (which you can put towards paying it off early if they don't have the penalty for doing so)
I agree, 20% as a minimum (as above). Normally you can pay up to an additional 10% off your monthly mortgage payment without penalty, but please check before doing so!
I suppose the Life Insurance thing only makes sense if you have a family - if you're buying on your own it would serve no purpose at all - and the lender wouldn't lose out as they can have the house anyway...
Life assurance is not necessary - I've had three mortgages (the latest within 4 months) and none have insisted on it. The brokers I have used have all tried to sell it to me however, as it seems they get a healthier slice from this than they do the actual mortgage.
There is a good article here:
Mortgage Life Assurance: Cut the cost by 30%...
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