Two life policies, one mortgage

This is a grey issue so all I'm looking for is some opinions on whether its right, wrong or ...

I took out a mortgage last year, in my name with my father acting as a guarantor, to buy a property in my name alone. The requirement at the time was that both he and I must take out full life policies which now means that the property is covered for double its value and the bank is doubly insured. I was told at the time to enquire in a years time when I had a good repayment history as to whether I could remove my fathers policy altogether...but on doing this recently I was told that it was only my salary that dictated whether he could be removed or not. Excuse my ignorance but is this right, can I get around it (his policy costs me 100 euros a month which I don't see is necessary...although as he has suggested if he was to fall in front of a train tomorrow...ha ha less of that!). Thanks for any replies

Why did you not take out a joint life, first death, policy?

Are the mortgage protection policies on a decreasing (in line with amount owed) basis?

F. Kruger said:

Why did you not take out a joint life, first death, policy?

Are the mortgage protection policies on a decreasing (in line with amount owed) basis?

Click to expand...

My hazy guess is that we took out two policies to keep a distinction but to be honest without sitting down and looking at the papers from then, I'm not sure. And again on the policy type, I have to plead ignorance, though I will check this at home.

What bank is it?

If your father is only a guarantor, then there might only be a necessity for life cover on the amount he is guarantor for.

For example:
you have a mortgage of 250,000
you only qualify for a mortgage of 200,000
Therefore your father needs to go guarantor on 50,000

Most banks will allow for you father to have life cover only on the 50,000.

Talk to them and see if this is acceptable

This might not be the most correct thing to do but it would probably work. If you really do not feel you need your father to have this policy, i.e. you are 100% comfortable with payments etc then why not just stop paying the policy, it will soon lapse if the payments arent paid. It may have been a requirement of the original loan but realistically what are the bank going to do, call in the loan? I dont think so. They will usually contact you a couple of times to say it has been missed. The usual problem is it paid by direct debit and cancelling the mandate with the bank is not foolproof (think gym memberships) and payments may still go through. The life company will not cancel it without the banks ok so the drastic solution is close the account the dd is coming out of. I have had to do this in the past to eventually stop a direct debit, long story!

I was in a similar situation where i had a mortgage with my mother. We were both on the mortgage but i was the sole owner. I had to pay her policy awell which added extra money to my mortgage payments and she was a lot more than me due to age etc. I tried to cancel it after i drew down the mortgage but the bank were notified and said no so i had to continue to pay. Mine was with PTSB is that who you are with? maybe thats the problem. in the end i sold and bought house with my partner so she was no longer on the mortgage. You may have to wait until you take your father off the mortgage altogether before you can take him off life policy.

Who is the mortgage with?

If your Father is over fifty he should be able to just fill out a waver and get the life policy cancelled

Mortgages normaly have this condition but if you or over fifty or can not get life cover the mortgage provider can drop this requirement.

I know of somebody who went guarantor for their child the parent was 49 when loan was taken out when they turned fifty they just contacted lender filled out waiver and got policy cancelled

Thanks for all the replies guys, some good advice in there...if it makes any difference, the mortgage is with ICS, my father is mid-fifties (the waiver idea sounds interesting) and his policy is for the full amount of the mortgage, not the unsecured balance as someone suggested it should be. I'll have to sit down and consider all this I guess!