Mortgage Protection cover

[johneil]

I would appreciate if anybody familiar with my situation could advise; I am in the process of buying an investment property with 3 family members on a 1/4 entitlement basis. The bank have advised us we require mortgage protection cover on the property; purchase price 310k borrowing 270k; I have been told by a friend that this cover is not mandatory or necessary on an investment property as the loan risk is 70k approx per person. Is it possible for each person to subscribe to cover on their own 1/4 share. I do not consider mortgage protection cover in this instance a good use of money over the 20 year lifetime. I would appreciate any comments please!!!

 

[ClubMan]

While mortgage protection life assurance is only mandatory for owner occupier properties (with certain exceptions) it is not mandatory for investment properties but some lenders may still insist on it. Their prerogative I guess. Where a lender does insist on it then I think that all joint buyers must be covered for the full amount borrowed in case any one of them dies. I don't think that each can get cover for 1/4 of the amount borrowed. Have you tried other lenders for your loan in case they don't require this cover?

 

[johneil]

Thanks ClubMan for your response, as we have a good relationship with our current lender we are reluctant to look elsewhwre for a loan. We have another investment property with no debt on it , valued at 220k, so with 2nd property would have assets value of 520k. We are not tied to our bank to take out MP cover from them but it is a clause in the loan agreement. Any other comments welcomed by viewers. rgds

 

[ClubMan]

Well, if seeking another lender is not an option and your existing lender insists on mortgage protection life assurance for investment property loans then there's not much to be said really is there? Other than shop around for the best deal on MPLA.