Retaining existing mortgage protection policy when switching mortgage

[SeaWorld]

We are switching our mortgage from Bank of Ireland to KBC. We want to retain our existing mortgage protection policy. I have read on this forum before that switchers were able to do this but always wondered how that would work in practice.

The life assurance company have advised the following:

We will require a release deed of assignment from existing bank noted on file, this is a letter to confirm the current bank on file has no interest in policy.

We will then require a letter from new bank to confirm the new bank want to have an interest in policy, this is called a Notice of Assignment.

Our solicitor has advised as follows:

The Bank of Ireland may not release the original Deed of Assignment before the mortgage has been paid off.

This will have to be sorted out with KBC as they usually require the policy to be assigned before they will release money, but the bank of Ireland will want the mortgage to be repaid before they will release the Assignment.

Can anybody tell me how to get around this conundrum, i.e. BoI won't release their interest in the policy before the mortgage is paid off but KBC won't release the funds to pay off the BoI mortgage unless the policy is assigned to them?

 

[misemoi]

With KBC we had to send a letter giving an undertaking that we would send the original policy doc when it was released from previous lender. I think switching to EBS we had a similar issue and the mortgage advisor suggested taking out a new policy for a month or so until previous lender had released their interest and then cancel the new policy. But I think in that case we got an undertaking letter from the solicitor.

 

[Protocol]

I am starting a new MPP for the new mortgage.

This has a lower amount and shorter remaining term than the existing MPP.

So the premium is 100 less pa.

After the switch completes, I will cancel the first MPP.

 

[Dave Vanian]

The same conundrum exists regarding the title deeds of your home. Your solicitor gets around this by being the middleman, holding the deeds while the re-mortgage is being processed and giving two undertakings - (1) to the incumbent lender that s/he will return the deeds to them if for any reason the re-mortgage doesn't finalise and (2) to the new lender that if they issue the mortgage funds, s/he will then send on the deeds to the new lender.

The mortgage protection policy can be dealt with in the same way. I'm assuming that you have done your research and figured out that it is cheaper for you to hold the existing policy rather than starting a new one.

 

[SeaWorld]

Thanks for this. That's an excellent way of explaining things .

We are satisfied that our existing policy meets our needs.