Bank asking for Mortgage Payment Protection Cover.

I have a family member who is taking out a 50% loan to upgrade an existing property that is mortgage free.
The bank is asking for an Income Protection Policy to be taken out as well as a mortgage protection policy.
Is an income protection policy now the norm with all new mortgages or is the bank chancing it's arm? Both are in good employment.
They have an existing life policy about 10 years old. Should they use this or just take out a bog standard Mortgage protection policy and keep their own life policy separate?

you need to look at the terms and conditions of the lender, ie the small print.

Bronco Lane,

the Bank {asking} is very different to insisting.
Knowing Banks I think probably chancing their arm.
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I would be inclined to take out a {bog standard Mortgage Protection Policy} and let it cover your new risk, on the basis that your existing life policy covers your risk up to today.
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See threads on income protection, I ain,t a fan of these unless you get good broker to advise you.
Bankers have been proven to be @ best , suspect on selling any policy!
If Income Protection is a deal breaker for the K50, take one out and then if its (duff) cancel it in 2 months. ie get the loan first ( I know devious).

If their mortgage protection policy covers the amount borrowed and the remaining term, the lender would be happy to have that assigned.

What age are they? Isn't there some exclusion for those over 50 from having mortgage protection policies?

I have never heard of a bank asking for an income protection policy. Are they trying to cross sell one of their own products? Go to another lender if they insist. Has your relative shopped around?


Brendan

Brendan,

Banks in (fluffy) times would have sold anything for short term profit.
Their tendency to oversell is again rearing its ugly head.
Its not that easy to just go to another lender , it never was a balance of equality twix borrower and lender..
With Banks Caveat Empor ? still applies.

Thanks. They are in their mid 30's. They were fearful about not being able to get a mortgage so jumped at the offer from one of the lenders. They did not shop around.
I was horrified when they were sold an income protection policy. It is going to add to their repayments. I don't believe that they need this. I think that they are terrified not to take it in case their loan application is refused.

Yup,

Young couple ready to be plucked !

I doubt it was a proper income protection policy, more likely one of those plan that pays out for 12 months if they are made unemployed.

It is probably the salesman in the bank trying to flog it. He doesn't make the decision on getting the mortgage, the underwriters do. Tell them to go to the bank manager and complain about this underhand selling. It is not a requirement to have this cover in place and the plan should be cancelled immediately. This kind of stuff makes my blood boil


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)