Home loan and need life assurance

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oaky9

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my parents have 2 significent business premises one of which they have lived in for the last 20 year, and an investment property which are all mortgage free. Now they want to buy and live in another property and have got the mortgage approved but have to take out life assurance, the bank says this is a regulation . They are in there mid fifties and are taking a 20 year mortgage but hope to have it paid in 3 years. Do they really need this life assurance as they have ample assets, or is this a way the bank can get more money out of them.
 
That is a joke. Absolutely not necessary at their age and considering their financial situation. I really resent people who try to mislead people with this type of garbage to extract even more financial gain.
 
Section 126 of the 1995 Consumer Credit Act.

Mortgage protection insurance.
126.—(1) Subject to the provisions of this section, a mortgage lender shall arrange, through an insurer or an insurance intermediary, a life assurance policy providing, in the event of the death of a borrower before a housing loan made by the mortgage lender has been repaid, for payment of a sum equal to the amount of the principal estimated by the mortgage lender to be outstanding in the year in which the death occurs on the basis that payments have been made by the borrower in accordance with the mortgage, such sum to be employed in repayment of the principal.

(2) Subsection (1) shall apply as respects all housing loans except—

( a ) where the house in respect of which the loan is made is, in the mortgage lender's opinion, not intended for use as the principal residence of the borrower or of his dependants,

( b ) loans to persons who belong to a class of persons which would not be acceptable to an insurer, or which would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally,

( c ) loans to persons who are over 50 years of age at the time the loan is approved,

( d ) loans to persons who, at the time the loan is made, have otherwise arranged life assurance, providing for payment of a sum, in the event of death, of not less than the sum referred to in subsection (1).

(3) A person who does not belong to a class referred to in paragraph (b) of subsection (2) shall not be required by virtue of this section to undergo a medical examination as a condition of a policy but nothing in this section shall prevent a person belonging to such a class from being required to undergo a medical examination.

(4) A policy under this section may, in the case of a loan made jointly to two or more borrowers, apply to such of the borrowers as may be designated by the mortgage lender, due regard being had to the wishes of such borrowers.

(5) Where the proceeds of a policy under this section exceed the amount due to the mortgage lender on the loan, any such excess shall be payable to the surviving borrower or to the estate of the deceased borrower as the case may be.


"I really resent people who try to mislead people with this type of garbage to extract even more financial gain."

Sorry? Did you know about the above section when you wrote that?

I don't have a problem with a lender looking for certain securities in exchange for handing over bucket loads of cash. By all means, the borrowers should bring the above section to the attention of the Bank, they can shop around with other lenders, they could sell an asset so they don't need to borrow.

These people are in the happy position, I imagine, of having choices.

mf
 
my parents dont and shouldnt have to sell an asset to buy this property. They have been loyal to the same bank over the years but still the bank want additional security. If they had of said they wanted to buy this house as an investment this life assurance wouldnt have even cropped up thats the annoying part as they bought an investment property 2 years ago and this wasnt an issue. so what should they do...
 
Have your parents shopped around, our threatened to take their business elsewhere?
 
hi, im going to get my parents to ring there bank manager tomorrow and either get them to drop the life assurance fiasco or lose a customer. We reckon we have 2 million in assets and are being loyal to our bank in giving them more custom but they dont seem to appreciatate this and know we can shop around, should be interesting, we are in the driving seat for once, not them, we started off on the ladder 30 years ago and still get no respect so here goes.......... will keep u all posted........ this is war lol.....
 
Does the bank have an assignment over the two million worth of assets? If not, it's of little value as security to them.
 
the bank has deeds of 2 businesses and deeds of land and house and when my parents got bridging loan of 100k a year ago required deeds of 2 businesses and 2 life assurances from my brother and i and that loan is nearly paid off. Have to say very unhappy with bank now, At the stage of moving bank nearly .
 
I am buying my parents original home from my brother.I have no mortgage on my main residence.I am re mortgaging my home for 120000 euro to buy this property.I need to take out a level term insurance policy as its an interest only loan.If I decided to buy the property as an investment property[which it is] I would not need this life policy BUT the interest rates are much higher 0.75% on an investment property.You can't win.A friend of mine has suceeded in getting loans for investment properties without this insurance.She has a number of properties and was able to bargain.
 
We have in the past been forced to take out this cover as part of the loan process but we just dropped it after the first year and the bank did not say boo to us.
 
Another point is that they are allowed to ask for this policy and to have it assigned to them but I believe that the law says that they can not ask you to take the policy out with them.
If you already have a life cover then you can assign that one to them or else shop around for the best priced cover.
(that advice is for others as I do feel that your folks should not have to do this if the bank has a lean on other assets)
 
thanks woods, they have been loyal to the bank all there lives and are just sick now, should know more tomorrow if they are moving bank they dont want to but will. They have 3 deeds in the bank with no loans on them and myself and my brother have 2 life assurances with the same bank so we all pulling plug on these 2 and moving bank if they dont knuckle.
 
If the bank are demanding this go else where for the assurance and they can add an assignment. Its pretty much par of the course for banks/lenders to look for this butyou ont have to buy it off them.
 
"thanks woods, they have been loyal to the bank all there lives and are just sick now, should know more tomorrow if they are moving bank they dont want to but will. They have 3 deeds in the bank with no loans on them and myself and my brother have 2 life assurances with the same bank so we all pulling plug on these 2 and moving bank if they dont knuckle."

Am I missing something? Your parents have no loans and the Bank is simply minding their Deeds? or are the Deeds held as security ? Have your parents raised the Consumer Credit Act with the Bank? What has the Bank said?

I am intrigued by the idea that you will make the bank "knuckle". By all means you can seek to negotiate but perhaps the cruel lesson here is that the Bank may not want this business except on their terms.

Shop around. Sell an asset. Your parents are in the happy position of having choices.

mf
 
You have the answer to this yourself, why don't you get your parents to pretend it's an investment property and then they won't need the life assurance.
 
Aileen2 said:
You have the answer to this yourself, why don't you get your parents to pretend it's an investment property and then they won't need the life assurance.
Click to expand...

And pay investment rates?

Have your parents pointed out that under the 1995 Consumer Credit Act they are not obliged to have life assurance as they are over the age of 50.

I know they are annoyed with the bank but their reason for requesting the policy is quite simple. If your parents died and left an outstanding mortgage they have the security of a life policy.
 
from hel_n

""Have your parents pointed out that under the 1995 Consumer Credit Act they are not obliged to have life assurance as they are over the age of 50. ""

thanks helen that is the answer to my question above.

bank finally waived life assurance due to the circumstances .



and thanks to all for there input.
 
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