Sorry to hear that Ste1 mind you I have lost count of the number of times I have explained here and elsewhere that mortgages in Spain are not regulated and lenders (nor that many brokers) are not willing nor compelled to be transparent and tell their clients everything upfornt from day 1. We confirm everything.
Most Spanish lenders insist that if you take out a mortgage with them in Spain that you take their life assurance cover. I have to say that best advice from me to any client is that any mortgage anywhere in the world should be supported by an appropriate life assurance policy. They key word in that is appropriate. Any claim on life cover here in Spain becomes subject to Spanish IHT legislation which is not as tax friendly (if there is such a thing) as UK IHT. Invariably the cover is not as comprehensive as UK life policies - I know when youre dead youre dead - what I mean is exclusion clauses - sometimes you cant even claim unless you die in Spain and sometimes the policies are only for residents of Spain. Additionally it is likely to be outrageously more costly. Some lenders also have the infamous single premium idea whereby the premium for the term of the cover is added to the mortgage debt - thus if you die next year you have paid for cover you dont need; oh and by the way they are chargin interest on the loan for the term and also earning in the region of 70% commission. Its the sort of thing that has come in for such bad press as single premium payments protection by secured lenders in the UK such as Black Horse, First PLus, and First National Bank (to name but a few). All interesting stuff......zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.
For those of you that have managed to keep your eye lids open thank you for sticking with us...
None of the lenders we usually recommend now insisit on arranging life cover for our clients - we have one lender that we use in extremely rare cases that does - last time we used them was over 15 months ago. We have lenders that that we recommend who insist on it from clients who walk in off the street but they know we will not recommend their mortgage products if they insist on life cover - it is extremely bad advice and as we operate on the ethos of most appropriate advice as if we were in the UK then we coul dnot endorse their mortgage products if they insisted on life cover. Funnily enough I was talking to someone this week who has been in exactly that situation but nobody told them about the life cover until they asked the question - if they hadnt asked it would have gone to Notary only to find the client had had 16,000€ added to the mortgage for life assurance. This is one of our lender partners and they tried for 3 years to get us to use their mortgage products with a permanent knock back until they removed the compulsory life cover - thus they now receive quite a lot of business from us - 20,000,000€ plus in year 1 so they are quite pleased as its business they otherwise would not have had.
Regarding buildings insurance we always recommend clients take the lenders for the first 12 months. Insurers here as per the UK have a reputation for wriggling out of cliams. Simply that here it is probably 10 times worse. It is against Spanish law for any mortgaged property to be without buildings insurance (bad advice too) but importantly the Bank of Spain have put the onus on the mortgage lender to police it. To wit you could arrive at Notary to complete and your bank discovers that the insurance that you have arranged is with a company that never pays out on claims - thus they are left in the situation of a buildings policy that is worse than useless with a loan they have advanced. easiest thing for them to do is to say "ok everyone has our insurance for the first year" - no doubt also a lot of people will leave the insurance with them as well (the cynical part of me). Nonetheless they will permit you to change towards the end of year 1 as lomg as you provide a copy of an appropriately worded policy with their interest noted (same as UK) as they are effectively regarded as the beneficiary until such time as the loan is repaid. Personally I think there is an extremely strong argument for leaving buildings cover with the lender - simple reason being that if they have sold you the cover on a property they have advanced a mortgage loan - they have a vested interest in ensuring that any claim is settled promptly to ensure their security is not impaired - but thats my personal view - bulidings cover from lenders is not that dear to be honest.