Short answer: No.
You don’t need to have Life Insurance in order to get a mortgage. This is a common misconception. Generally speaking, the only kind of insurance you sometimes have to have in order to get a mortgage is Home and Contents Insurance.
This is because the mortgage provider has a vested interest. If there’s any major damage it could impact the value of the property, getting Home and Contents Insurance helps protect them from this risk.
But… getting a mortgage is one of the most common reasons that people get Life Insurance. Find out why below.
For most of us buying a house is the biggest debt we’ll ever have in our lives.
So if you’re wondering whether Life Insurance is for you it’s worth asking the question:
Would someone you love be financially affected if you were to die tomorrow, or become terminally ill (making it hard to work).
If the answers no and someone else would be able to carry on paying your mortgage, no issue, then lucky you - no further action required.
But for most of us it would have a financial impact on the people we love to some degree or other.
That’s where Life Insurance comes in.
Life Insurance let’s you choose someone (a partner, family member or friend) who’d recieve a lump sum payment if you were to die or become terminally ill and given 12 months to live by a relevant medical professional. This money can then be used to cover big payments like a mortgage.
When it comes to Life Insurance there’s no time like the present. Here’s why…
Firstly, the younger you are the cheaper your monthly premium (payment tends to be). Locking a cheaper premium in early can save you money in the long run.
But more specifically - if you’re justs getting Life Insurance to cover a mortgage payment you can get a particular kind of Life Insurance, called Decreasing Term Life Insurance. This means that the lump payment decreases month by month, alongside your mortgage payments - this tends to be a lot cheaper than the other kind of life insurance - Level Term Life Insurance - where the cover remains the same throughout.
Good news, nothing major happens. You haven’t missed the boat and you won’t get denied a mortgage.
As we’ve mentioned it isn’t compulsory and your mortgage provider will not force you to have it in place.
Bad news, if you were to die:
There are a smorgasbord of Life Insurance providers on the market, offering different kinds of policies and costs.
At Octopus Legacy we know that life is for living - not for stale meetings with stuffy insurance providers or wading through paper forms, that’s why we’ve kept things simple.
You can get a tailored free, zero-obligation quote on our website and be done and dusted in as little as 15 minutes.
Life Insurance - in just 4 steps:
We offer both level and decreasing cover, for those aged 18 - 65 and up to a maximum cover amount of £500,000.