Mortgage Protection only applies to Endowment Loans

K

Kluivert

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In the process of buying our first home. Got an amended Letter of Approval.

It states "it was a requirement that a life policy be assigned in respect of your loan such a requirement will now only apply where the loan is an Endowment Loan".

Am I right in saying that Mortgage Protection is not required on our Annuity Loan.

Would one be advised to take out mortgage protection regardless.

Thanks.
 
If you are buying a home for your own occupation, are under 50 and in good health, mortgage protection life cover is a requirement, regardless of the type of loan.

However, some lenders don't take an assignment (legal charge) over the policy any more. So you must prove to them that you have a suitable policy but you don't need to assign it to them.
 
Also - even if mortgage protection life assurance is not technically required (e.g. investment mortgage) some lenders may still insist on it. As Liam says, in the vast majority of cases of owner occupiers mortgage protection life assurance is required and the lender will insist on it. Of course you can shop around for this rather than buying it (often at a premium) from the lender.

I thought that some or all endowment loans did not require separate mortgage protection life assurance becuase the endowment policy provided for that or something?
 
I thought that some or all endowment loans did not require separate mortgage protection life assurance becuase the endowment policy provided for that or something?
Click to expand...

You're right - in the above context the loan offer is saying that where the loan is an endowment loan, the lender still insists on taking an assignment over the endowment policy (which also covers off the life assurance requirement).
 
I rang the bank when it opened this morning and they informed me that this was an error and is normally associated with Investment properties, they are checking to ensure that the property is not down as investment.

Thanks for the replies.
 
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