I am being coerced into taking out Life/Mortgage Insurance

E

eirman

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I am 53 and I am going for a 72% mortgage. The mortgage company are insisting that take out insurance as the mortgage is above 65%

I have absolutely no dependents and I forcefully told them that I do not want it and that by law it not required for persons taking out a mortgage aged over 50. However they said "no insurance - no mortgage !!"

Anyhow, I have decided to get the the insurance as I need the mortgage.

I have 3 questions ....

> Can someone give me the link the relevent over 50 legislation.

> What the worst that can happens if I cancel the insurance when I gain posession of the house.

> Should the financial ombudsman be consulted ?
 
eirman said:
However they said "no insurance - no mortgage !!"
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Mortgage protection life assurance is mandatory in most owner occupier cases. In some cases (e.g. over 50) the lender may waive this requirement but they are not obliged to do so.
> Can someone give me the link the relevent over 50 legislation.
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Consumer Credit Act - in partcular: 126 Mortgage protection insurance.
> What the worst that can happens if I cancel the insurance when I gain posession of the house.
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The LA provide will notify the lender and the lender will insist that you put cover in place again.
> Should the financial ombudsman be consulted ?
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No.
 
It may not be required by law, but I don't think that means that lender can't insist on cover being in place.

Post crossed with ClubMan
 
Thanks for the replies - I guess I'll have to work hard to get the equity up to 35%
 
MrKeane said:
An if you don't?
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I presume that the terms & conditions of the loan agreement cover this and presume that there would be some way to force the issue. In fact the LA provide may need to clear the cancellation with all parties with a vested interest (i.e. the mortgage holder and the lending institution) so it may not get as far as being able to cancel in the first place.
 
You could always just take it out and cancel it just after you have got the mortgage. There is nothing they can do at that stage - they won't take the mortgage back off you.
 
Art said:
You could always just take it out and cancel it just after you have got the mortgage. There is nothing they can do at that stage - they won't take the mortgage back off you.
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Are you absolutely sure about that?
 
Art said:
You could always just take it out and cancel it just after you have got the mortgage. There is nothing they can do at that stage - they won't take the mortgage back off you.
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In one way isn't that like saying that you can take out a mortgage but not make repayments ie if the life cover is a condition of the loan offer?

The life policy will be assigned to the lender. In order to cancel the cover the life assurance company will require the authorisation of the lender.
 
Simply stop paying the premium. No insurance company will keep cover in place without payment.

As said there is really very little can be done where someone stops paying the insurance.
 
bond-007 said:
As said there is really very little can be done where someone stops paying the insurance.
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As above - are you absolutely sure about this? Can anybody post the terms & conditions of their mortgage loan agreement as they relate to the issue of insurance/mortgage protection?

Note that the law (Consumer Credit Act) requires that owner occupiers have mortgage protection life assurance other than in limited circumstances when it may be waived.
 
I know of one person who had LA and then simply stopped paying it. LA cancelled cover as no premium was paid. Bank did absolutely nothing about it.
 
The T&C on my mortgage was very clear...

stop paying the life or home insurance and we will take out a policy for you , and charge you monthly with your mortage payment....
 
bond-007 said:
Simply stop paying the premium. No insurance company will keep cover in place without payment.

As said there is really very little can be done where someone stops paying the insurance.
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Has anyone any sensible suggestions?
If what some posters are saying is true why don't we all do that? (those of us under 50)
 
If I did cancel the insurance policy and refused point blank to pay, could the lender say I was a a bad risk and penalise me by adding an additional, say 0.5% to the mortgage rate?

The lender is not running any kind of risk lending on a 72% mortgage.
 
Is it too late to switch lender? Not all insist on life cover if you are able to waive it under the CCA. Might be worth pointing that fact out to the bank you have your current offer from.

Sarah

www.mortgagesoverseas.com
 
jhegarty said:
The T&C on my mortgage was very clear...

stop paying the life or home insurance and we will take out a policy for you , and charge you monthly with your mortage payment....
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They will do that with house insurance but will they with life insurance?

What if a person is uninsurable and lied to obtain LA and then the LA company found out and cancelled the policy? I suspect the bank would have a job on its hands to repo the house.
 
In theory a lender can recall a loan and demand immediate full repayment of the balance in the event of breach of conditions. In practice they're unlikely to do so because a customer cancelled the life assurance policy.
 
LDFerguson said:
In theory a lender can recall a loan and demand immediate full repayment of the balance in the event of breach of conditions. In practice they're unlikely to do so because a customer cancelled the life assurance policy.
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Thought as much. I doubt a circuit court Judge would be receptive to a repossession request on those grounds.
 
On the other hand a court/judge might not have much sympathy for somebody who signed a contractual agreement and then just ignored some of the clauses.
 
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