Mortgage Protection Insurance

I took out a Spanish mortgage in 2009. One of the conditions was to take the Bank's mortgage protection insurance. That seemed ok except, it has gone from 60 euros a month in 2009  to 85 euros a month this year. I believe it is not a legal requirement, but the bank's policy to have this. I can get the same amount of cover myself for around 25 euros a month. Any useful advice would be greatly appreciated.

Any ideas folks?

Any ideas folks?

Hi Jarvi - I doubt that it is actually legally required so you should ask the bank about cancelling it.  You may find however that the interest rate is dependant on you buying this second product from them, and your payments may then rise.  If it was me, I would ask the bank direct.

Thanks Clair,

I will ask them.

85 euros a month adds up to over 1000 euros a year, so even if the interest is higher I don't think it would be anything like that amount.

Hi Jarvi,

It does seem very odd. 

In my experience the premium for Mortgage  Protection Insurance should be static - I've never heard of one that increases. 

If you have a repayment mortgage (ie where the amount owed gradually decreases) this is even more absurd.  

If the mortgage is "interest only" it makes a bit more sense, but it's not the way it's done in the UK.

I suggest you have a close look at the mortgage quotation and offer letter they will have given you.  Did they state the premium, implying that it was static, or was there any indication that it would increase?  To me that is the starting point.  Then possibly speak to another bank and obtain a quote from them and ask the question as to whether or not their premium increases.  To me this is weird and illogical, but it would be good to know if it is customary in Spain, the two are not mutually exclusive.

I would probably be more demanding than Claire T, but it does no harm to try and settle it amicably first.

Thanks Acer.

I will get the documents together and check. My mortgage is a repayment, and as you rightly point out the balance owing decreases year on year, therefore the amount they would pay out in the event of my demise would be less.

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