Extra Cover and Term on Mortgage Protection?

[al8652]

I'm being advised to add an extra year of cover and term to my basic mortgage protection policy, to cover any possible delays with closing.

Does that sound like a good idea?

Thanks

 

[Dave Vanian]

I'm being advised to add an extra year of cover and term to my basic mortgage protection policy, to cover any possible delays with closing.

Does that sound like a good idea?

Thanks

No. You'll pay a bigger premium for a longer term needlessly. It sounds like a salesperson is trying to convince you to put your cover in place now rather than waiting until your mortgage is ready to draw down. Apply for your mortgage protection for the exact amount and term to match your mortgage. Don't start the policy until a week or two before the mortgage is due to draw down.

 

[al8652]

Yeah, that's what I figured. Just thought I'd check on the off chance it was _normal_. Thanks.

 

[Fahrenheit]

Hi,

As advised by Dave Vanian put the cover live about 2 weeks prior to drawdown.

If there are delays then most lenders will allow you a month or two before requiring what is known as a shortfall letter.

A shortfall letter is a document you sign confirming you are aware that the end date of the mortgage protection is a few months shorter than the end date of the actual mortgage & that you acknowledge this shortfall & would still like to proceed regardless.

Good luck!


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