Annual review of mortgage rate - do we pay more?

Sarah W said:
An industry view? Pure codswallop! As long as their is sufficient life cover for the term and amount of the mortgage and it is legally assignable (i.e. not death in service benefit or pension term assurance) then any lender will be happy to accept it as security for the mortgage.

If a mortgage is cleared early and any associated insurance is not cancelled and there is subsequently a claim the remaining sum assured will be paid to the estate of the deceased. If the policy expires before the live(s) assured it will cease with no value.

Sarah

www.rea.ie
Click to expand...

What do you think the motivation was for the broker to allow us to think the situation was as I stated above?? He cost us money as I had to pay the accountant. He also caused worry and delay.

Are you absolutely sure of this Sarah? I'm not doubting your knowledge of the situation but the broker we used was recommended by our insurance broker, a person we have dealt with for over 10 years. So you see, your reply has implications for me! Insurance/pensions is not my forte and I find it difficult to get my head around it.
 
I am absolutely sure that lenders will accept existing policies, as long as they cover the amount and term of the new mortgage. I have no idea why your broker didn't inform you of this. I don't understand why you had to get your accountant involved especially as you managed to avoid taking life cover at all?

Sarah

www.rea.ie
 
Sarah W said:
I am absolutely sure that lenders will accept existing policies, as long as they cover the amount and term of the new mortgage. I have no idea why your broker didn't inform you of this. I don't understand why you had to get your accountant involved especially as you managed to avoid taking life cover at all?

Sarah

www.rea.ie
Click to expand...

I was asked to get an accountant involved. The broker told me that the lender needed this letter in order for us to avoid taking mortgage protection cover? He also recommended an accountant who's fee was 300 for letter. This price was 'knock down' as the acc. was a friend of his! We went to our own accountant for the letter, which he was willing to supply as long as he didn't have to tell any lies. He didn't and so had no problem although, at the time, he questioned the neccessity for it. We just wanted to keep things rolling along and so we provided all we were asked for.

Had no problem with the rate we got or the service in the end. I can't see what would have been in this for the broker or the insurance broker, other than us having to buy an overpriced mortgage protection policy due to our age and perhaps having the kudos of throwing business another friend's way i.e. the accountant?
 
Under the Consumer Credit Act you can waive life cover for a number of reasons;

1. You are aged over 50
2. The property is not your main residence
3. You can not get life cover for medical reasons
4. You can only get life cover at a significantly rated premium.

If you fit into any of those catergories you are not required to effect mortgage protection (although the lender can subsequently decline the mortgage). I have NEVER heard of an accountant's letter being required - if you've nothing to lose why not contact the broker and ask him to comment on this thread?!

Sarah

www.rea.ie
 
Thanks Sarah. I satisfy all 4 conditions listed above!:eek: Have spoken to OH, just in case I got any of my facts wrong....I didn't. What annoys me most is the insurance broker, as I said, we have a long standing relationship (soon to be severed) and he confirmed all the mortgage broker said. I trusted him and took his word. Normally we'd check out everything for ourselves. In this instance I'm beginning to believe our trust was misplaced which has lead to us operating under a mistaken premis. Granted it didn't cost us a fortune but that's not the point!:mad:

Thanks again for the help Sarah.:)
 
Hi Sarah,
Does this mean you don't think we'd end up paying any extra interest over the 20 year period? I actually don't think NIB "offer" this annual review option, it wasn't in the terms of our mortgage and didn't happen with the original mortgage we had with them. When I asked how we ended up on this option when we didn't sign up for it, the manager told me it had to do with how their old systems were set up and we were automatically put on it which wouldn't happen now that they've upgraded their IS systems.
 
Probably not, it should even it's self out over the years however you need to get clarification in writing from NIB of exactly what 'plan' you are on. Asking for this by writing to them c/o registered post should illict a quicker response!

Sarah

www.rea.ie
 
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