It is not required.
The real debate around life insurance is around the "What if... ?" question.
If you were to die before the mortgage was paid off, what would be the impact?
Your partner may inherit the house, but could they alone meet the mortgage payments?
Is the mortgage only in your name? If you died it would have to be repaid and from your estate... i.e. the house would have to be sold, or your partner might have to get a mortgage in their own name to continue to live in the property.
Personally, I would only consider a mortgage without life insurance if I alone lived in it. If there is anyone else involved, and there were no other means of paying off the mortgage in case of death, then I would get the insurance... just in case.
Current mortgage adviser was talking to us about life insurance. When he heard what my "death in service" payout would be, he said "don't bother", but my wife is covered so that if she pegs out, I get the house clear of debt. Life insurance DOESN'T pay out if you are just ill.
For the Old Farts amongst us, critical illness is so **** expensive as to be prohibitive.
You get a mortgage in principal before you start putting in offers for houses. How can you put an offer in without knowing how much you can borrow? :)
I think the mortgage in principal lasts 3 months or something like that. It's worth noting anytime you get a mortgage in principal or apply for a mortgage it counts on your credit score. Like applying for multiple store cards :)
I'd start by seeing an independant mortgage advisor who will give you a no obligation first meeting, give you some ideas about what you can borrow and the repayments then you know where you stand and its cost nothing. It gives you a figure to work off without having applied for a mortgage in principal so you know what price bracket your looking at. You can then look at houses, find one and apply for a mortgage and providing your circumstances havent changed you should be ok :)
These days, it's so easy to check what mortgage deals are available that an 'independent' mortgage or financial advisor should be unnecessary for a simple matter of a mortgage. If you do use one, be aware that they will cost you. Either they are on commission (so they are unlikely to recommend from the full range of products available) or you will pay them cash for their services which is expensive.Quote:
I'd start by seeing an independant mortgage advisor who will give you a no obligation first meeting, give you some ideas about what you can borrow and the repayments then you know where you stand and its cost nothing.
People on very low incomes could be forced to take mortgages up to their 70th Birthday, but personally I don't know any 20 year olds with a 50 year mortgage! Sounds scary!
And do bear in mind that there is only one way that interest rates are going to go in the future - and that is up!
I can't recommend strongly enough that people research to the point where they operate with confidence in their own judgement on these things. My experience of IFA's is that they have often acted to obscure their earnings from commission and have been partisan in the products they recommend because of that commission. Most recently advice given by a long time IFA to my wife has been revealed as little more than a way of lining the IFA's own pockets and has probably cost her tens of thousands in past and future returns. The last two times I've bought a house I've sought advice from IFA's in addition to doing my own research. IME their advice has been generally poor and the products they have put forward have been motivated not by what is best for me but by the commission it has bought them.Quote:
As I had said, most of them will do a free no obligation first meeting to discuss your case and give you some base figures (they do around me anyway as i've sat with a couple and done it). If it costs nothing and can eliminate the need to 'guess' its probably worth an hour of time to do it :) If you phone and speak to them and they say they'll charge you, find another........
There is nothing wrong with doing research yourself as well.
IFAs are now required to tell you upfront how they will be paid for their service. Be it commission or you put your hand in your pocket.