Hi, I am currently overpaying my mortgage with PTSB (tracker ECB + 2.15% due to moving house). It's building up in credit as an overpayment and I can use it later for repayments if I need it but is reducing the interest payable. What would happen if anything was happen to me and the mortgage protection policy was to kick in? Would this overpayment be lost as policy would just pay what's owed. There is about 15k overpayment there now but I was thinking about it and this may not be the best way to proceed.
Overpaying Mortgage
- Thread starter Mumm_ra
- Start date
Your mortgage protection policy will pay off the outstanding mortgage. Were the mortgage protection to be paid out and it exceeded the outstanding mortgage balance you, or your estate, should receive the excess.
Or at least that is how it typically works. No harm checking with your policy provider.
Or at least that is how it typically works. No harm checking with your policy provider.
Last edited:
Brendan Burgess
Founder
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- 53,409
Your mortgage protection policy is a stand alone policy.
The sum assured will be paid if you die during the period of the policy.
The same amount will be paid out whether you have cleared your mortgage or whether you are in deep arrears.
Nothing to worry about. No need to check with anyone.
Brendan
The sum assured will be paid if you die during the period of the policy.
The same amount will be paid out whether you have cleared your mortgage or whether you are in deep arrears.
Nothing to worry about. No need to check with anyone.
Brendan
This came up again today when an employee (advisor) of a life insurance company was insistent that Mortgage Protection will only clear the mortgage irrespective of amount mentioned in the policy. In other words, the suggestion was to reduce mortgage protection in line with current mortgage to save money as it doesn't give any benefits. The person was so confident that he put me in doubt.
I know the mortgage protection has reducing benefit (as compared to life insurance) but it can be cheaper alternate to life insurance providing surplus benefit (after settling mortgage) to the estate if one can not afford a separate life policy.
Comments welcome
I know the mortgage protection has reducing benefit (as compared to life insurance) but it can be cheaper alternate to life insurance providing surplus benefit (after settling mortgage) to the estate if one can not afford a separate life policy.
Comments welcome
Unless there has been a change in recent years the policy always paid out what *should* be owing on the mortgage based on the term and amount, although there is also an assumed investment rate built into the policies (or used to be) but it's usually conservative so unlikely that the amount would dip below amount owing. So if you *should* owe 50k for example when you die but have paid off a lump sum of 20k at some stage then the 50 should be paid out. That was always my understanding of them when selling them but then again maybe it's changed!
It's kind of a strange scenario anyway in that taking out a new policy for an amount slightly smaller than original in a decreasing policy is unlikely to give a huge saving and it also opens you up to new underwriting and who knows what health issues have been experienced in intervening time!
It's kind of a strange scenario anyway in that taking out a new policy for an amount slightly smaller than original in a decreasing policy is unlikely to give a huge saving and it also opens you up to new underwriting and who knows what health issues have been experienced in intervening time!
Dave Vanian
Registered User
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- 1,309
Agree fully. And you've got a bit older. It might be worth looking at if you've made a substantial overpayment off a big mortgage, but unlikely to be worth the trouble for a small reduction on a modest mortgage.