Mortgage Life Assurance UK
How to match your life policy to your mortgage without spending too much.
With mortgage life assurance UK buyers can breathe easy- these policies are usually both cheap and uncomplicated; although if you have an interest-only mortgage you may want a level-term policy, in which case you will have a few more choices to make.
When you get your new home, you probably won’t be allowed to obtain a mortgage without the loan being covered by life assurance so that if you die before the mortgage is paid off, the lender doesn’t lose out. When buying mortgage life assurance UK customers usually get the cheapest possible life cover; and in most cases that’s decreasing term assurance. If you have a repayment mortgage, a decreasing term policy is indeed right for you. It’s pretty much the cheapest type of policy, because the value of the policy in redemption (if you were to die) reduces along with the size of your outstanding repayment mortgage.
With mortgage life assurance UK buyers can pretty safely buy on price- because the only important parameter is the amount of mortgage cover required.
If you have an interest-only mortgage, however, be aware that you’ll need level term cover. That’s because your mortgage is split: you’re only paying off the interest on the property, while an investment of some sort will mature and (ideally) pay off the hard part of the mortgage. That means that until the date of maturity, the entire property is effectively unpaid. Therefore when looking for interest-only mortgage life assurance UK buyers need to go for a level term policy. Again, these are highly competitive, and you can largely go on price alone, although there are many more tweaks and options at your disposal on such policies.
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