AIP/replacement Letter of offer-mort term/finish date 1 year shorter/earlier than a Mort Prot Policy

coloc

Registered User
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Hello

I had a loan offer from a bank -and as per usual requirements I put in place a mortgage protection policy -This was cover for the same principal and term as mortgage.

but the letter of offer expired very recently-and I had to reapply for mortage- bank have now provisionally offered the same principal but for a term reduced by 1 year.

My question is around the mortgage protection policy that I have and the fact it has a 1 year longer term on the same principal_ I don't want to have to get into reapplying for insurance so:

  • If I were to accept the new mortage offer with a 1 year shorter term, is it likely the bank will accept the current mortage protection policy that i bought?-it now covers for same amount but 1 year longer term/finish date?
  • OR
  • are they likely to be very rigid on the insurance term length/finish date matching the exact term length/finish date of mortgage.

*Also possibly worth noting that insurance is cover for the principal at 6%-which is a lot higher than the actual interest rate of the mortgage approval.
I would hope that would mean the slightly longer length insurance term/finish date would be insignificant to them.
 
The longer term won't be an issue. It provides more cover than they need, so they won't complain!!

By the way, at 6% interest, your policy will reduce in value more slowly than your mortgage balance, so you'll be over insured in that regard also.
 
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