Urgent question re Life assurance as condition for loan

K

Kitty

Registered User
Messages
50
Hi there, Apologies if this doesn’t land in the right thread – but I have an urgent problem for which I appreciate with some advice.

My loan approval eventually came though with a condition that my father (65, retired & who is going guaranteeing/ going joint purchaser with me on the loan – but for whom the house will not be his principle primary residence) gets 5-year life insurance on 100,000. After weeks of delay, the insurance guys came back to say they would provide cover, but at what I think is an exorbitant amount (almost 300 a month). My solicitor had originally suggested that a disclaimer be signed to the effect that should I abscond (not likely), my father would cover the loan (or something to that effect). My Broker is now checking with bank to see if they will allow for disclaimer to signed given the punitive rate suggested by insurance company.

My question is, is the mortgage provider likely to agree to this disclaimer? (are they obliged if I suggest it to them or is it at their discretion)? I’m anxious and under severe pressure to close (put holding deposit on in December and there have been delay after delay – mostly due to broker). If they don’t agree, what are my options (going with the insurance as offered in the hope I can get out of that policy asap for an alternative). I will never do business with the broker in question again, but cant afford time wise to change him a the moment.
All replies appreciated.

Kitty.
 
It would appear that the bank are looking for cover that, in the event of your father's death within the first five years the mortgage would be reduced to a level that you could cover on your own income. This is not unusual. Given the prohibitive premiums perhaps they could be persuaded to request a lower level of cover. Does he have any existing life cover that could be assigned? Or death in service benefit through his employment (not assignable but may stillbe of interest to the lender)? Who is the lender? Some are more particular about this issue than others.

Sarah

www.rea.ie
 
What is the discrepancy between what you can get alone and what you can get with your father as guarantor? If it was c. €20K and your father had that amount handy then it might be better for him to lend that to you (and you pay him back obviously) rather than paying out €18K in life assurance (€300 x 12 months x 5 years). However, given the amount of cover that they are looking for I guess that they're lending you c. €100K more with a guarantor than they would without? Maybe you simply need to buy a cheaper property within your means?
I will never do business with the broker in question again
Click to expand...
Why not? How are they at fault?
 
Hi Sara,
Thanks for swift reply. The mortgage provider is Permanent TSB – are they particular about this type of issue?
What is so frustrating is that I can, and have shown evidence that I can, cover the repayments myself with no help from my Dad.
I will check out the other options you mentioned – the broker has all these details already.
BY the way, what’s the worst the builders/ vendors can do, if delays another few days/ weeks?

Kitty
 
Hi Kitty,

The same thing happened to me - my father is 60.

The mortgage broker advised me to cancel the policy after a month, thereby leaving me with no mortgage protection. I was shocked. Seemingly it is quite common. Her attitude is that the mortgage has been paid out and they can't take it back. I did this and had no trouble. My mortgage is with Permanent TSB also.
 
Hi Clubman,
Thanks for your reply.
Yeah, the difference is 100K and unfortunately, Dad doesn’t have that to lend to me.
Your suggestion to buy a cheaper property within my means is valid, but I paid my deposit (10% non refundable) once I go the loan approval (on the advice of the broker that the loan approval was the hard part and the rest was just formalities - naively I guess now).

The problem I have with the Broker is that he is constantly giving me the run around and never delivers when he says he will or returns my call. Everything thing seems to take an age, and he is very dismissive (when I ask him to explain any of the process he tells me not to worry that he has, or will have it all sorted). I gave him my details in December and signed what he told me I needed to in his office on January 5th. It was weeks later that he advised that he had changed the life assurance company he dealt with and so I had to change my life policy and it was only then we found out Dad would need to do a further medical etc and that took time. Dads policy finally got approved on Monday of this week but at the rate I mentioned earlier. Also when arranging for the first policy for myself, he went through all the medical history questions with me, with my father present rather than let me fill them out in privacy. I thought this unusual and should have pointed this out to him, but let it go, as luckily I had no answers about which I was be embarrassed.

Kitty.
 
PTSB aren't known to be rigid about life cover for a guarantor but without knowing the details of the case it's hard to comment. You could try approaching them yourself in case your broker hasn't pushed your case hard enough (there's a LOT of commission on a €300 a month policy) or offer (if you can) to put six months repayments into a deposit account with them. The builder/vendor can charge you penalty interest if completion is delayed so check with your solicitor to see if they are pushing yet.

Whilst I would be very slow to condon what Art was advised to do it is not unknown.

Sarah

www.rea.ie
 
Sarah, As I said I was quite stunned myself.... In Kitty's case (as in mine) they are being rigid because her father is a joint purchaser, not just a guarantor.
 
Thanks Art. Does one just sign up to the life policy and then just cancel after a month? Will they not notify PTSB? If they do, would there be any consequences?

Sarah, Can you explain a little about your suggestion of 6 months repayments being out into a deposit account (approx €9,000). Do you mean as collateral or insurance for them? For how long would be reasonable to leave it there?

Kitty
 
Yes. I signed up to the life policy and just cancelled after one month. I got some correspondence from them subsequently but just ignored it. I'm sure they notified PTSB but I heard nothing from them. As I was told by my broker "they (PTSB) aren't going to take the money back off you"!!!!!!!!
 
It was weeks later that he advised that he had changed the life assurance company he dealt with and so I had to change my life policy and it was only then we found out Dad would need to do a further medical etc and that took time. Dads policy finally got approved on Monday of this week but at the rate I mentioned earlier.
Click to expand...

You don't have to go with the life company your broker normally uses. Was your father initially approved by another insurer, without a medical? At €300 a month, you would almost certainly get better value using a discount broker (e.g. www.labrokers.ie), though unfortunately that might delay things further.
 
Kitty said:
Thanks Art. Does one just sign up to the life policy and then just cancel after a month? Will they not notify PTSB? If they do, would there be any consequences?

Sarah, Can you explain a little about your suggestion of 6 months repayments being out into a deposit account (approx €9,000). Do you mean as collateral or insurance for them? For how long would be reasonable to leave it there?

Kitty
Click to expand...

If you can provide them with a 'comfort' zone of six months payments for, say, two years in that if your father died or you were unable to make the payments for any reason they may accept this in lieu of the life cover for your father. No harm in putting it up to them.

Sarah

www.rea.ie
 
Sarah, Thanks again. Will put it to them.

Mugsgame, Good point re going elsewhere. I dont think I can afford the time though - expecially if it means another medical for Dad - who if he didnt already have high blood pressure, is surely susceptible now! ;-)
 
Thanks for all your replies & help yesterday.

For info, the update is: Mortgage provider is not happy to waive the condition of a life assurance policy for my Dad, but have agreed to reduce the amount of cover from 100k to 50 which is somewhat better. I am waiting for details on how much that will cost per month, (presumably around ½ the previous offer) and am also waiting to hear back from Bank to see if the option Sarah W suggested (6months repayment on deposit) would be an acceptable alternative. So hopefully just another few days avoiding calls from the builders!
 
You must log in or register to reply here.
Back
Top