life Insurance on Mortgage

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01 Aug 2017 4:03 PM by Curt2444 Star rating. 2 posts Send private message

Just applying for a mortgage and they want 34000 euros put on top of the mortgage (105,000) over the 20 year period for life insurance for me and the wife ,which seems a bit heavy ,I asked the bank if this is Law over there ,Informed me no but Every bank Spain insist on this before a Mortgage would be offered ,Didnt Know there is a tax on the Mortgage aswell. im aware of Tax on the property ,And didnt know notary needs to be paid on the Mortgage as well as the property.

Any help would be appreciated

Thanks in Advance

Curt





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01 Aug 2017 4:42 PM by Jarvi Star rating in Halifax UK and Sucin.... 756 posts Send private message

I had this problem. The life insurance element was 60 euros a month at the start of the mortgage. Within 7 years they had upped it to almost 90 euros a month, the reasoning being that I was getting older, I argued that although I was getting older the sum they would have to pay out would be less as the balance was reducing each month.. I tried several times to get round it but they wouldn't budge. In the end fortunately I had enough money so I paid off the mortgage, and even after that they got an extra 90 euros as you have to give 1 months cancellation, which I couldn't do until the mortgage was paid off. I would try a different bank if I were you, don't take their word on anything, they lie.





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01 Aug 2017 8:17 PM by Donald1966 Star rating. 14 posts Send private message

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I have never understood the need for life insurance when taking out a mortgage, other than it being a scam earner for the lender. It should have been made illegal years ago. It is just another PPI scam.

Surely the lender has sufficient security on the loan/mortgage by way of first charge over the property. This is usually safeguarded by the initial loan to value and should increase over the term period as the loan reduces and the property value increases.



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01 Aug 2017 10:02 PM by baz1946 Star rating. 2259 posts Send private message

I have never understood the need for life insurance when taking out a mortgage, other than it being a scam earner for the lender. It should have been made illegal years ago. It is just another PPI scam.

Surely the lender has sufficient security on the loan/mortgage by way of first charge over the property. This is usually safeguarded by the initial loan to value and should increase over the term period as the loan reduces and the property value increases.

In a marriage with a mortgage on the home if one person dies isn't it fair to assume the living person has some sort of security in the knowing that possibly all the loan, or even half of it is paid up. I know of one situation where the Male partner died and they had cancelled the life policy due to cost, the living partner now has the full loan to repay.

The lender might have enough security on the house but what would the outcry be if when a partner died they took back the house because their was no life insurance to reduce the loan , Spain has a big enough problem at the moment with houses that have been handed back I hardly think it needs yet more.

In Spain many houses haven't increased in value at all, many even dropped a whole lot, and many may not rise for some time yet and unfortunately still have large loans attached to them.

Insurance of any kind is a waste of money when you haven't used it, but can be a life saver if you do need it.

 

 


This message was last edited by baz1946 on 01/08/2017.



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01 Aug 2017 10:34 PM by Jarvi Star rating in Halifax UK and Sucin.... 756 posts Send private message

It isn't the life insurance thats the problem. Its the cost of it. You can get the same cover for £20 per month in the UK that I was paying 90 euros a month for in Spain. It is just a way for the banks to rip people off.





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01 Aug 2017 10:52 PM by Donald1966 Star rating. 14 posts Send private message

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I understand your point baz but the taking out of life insurance should be a personal decision and reflect all the personal circumstances of either an individual or a couple. For example providing an income for the surviving partner, unnecessary for a single person. What if the borrower already has life insurance or a company pension scheme that has life cover.

It should not be forced on borrowers by lenders at an inflated price just to make a scam profit.

If property values drop has they have done in Spain, that is all part of the risk business the lenders have decided to be involved in, and lets face it, who caused most of it. They cannot have their cake and eat it.

 


This message was last edited by Donald1966 on 01/08/2017.

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03 Aug 2017 9:37 AM by windtalker Star rating. 1822 posts Send private message

It is called PPI in the UK .

 


This message was last edited by windtalker on 03/08/2017.



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03 Aug 2017 9:50 AM by baz1946 Star rating. 2259 posts Send private message

In the UK it is illegal to sell What we call PPI ...a mortgage lender can only assist you with getting a loan in the UK.

You sure about that Windtalker, it is illegal to misrepresent the conditions of PPI, it has to be explained fully and not mis-sold hence all the past problems, you might find that you have to offer it to a customer and if they refuse it, they have to sign a declaration saying they were offered it but had refused it.

 





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03 Aug 2017 10:25 AM by Lestat Star rating. 4 posts Send private message

Payment Protection Insurance supposedly protects the monthly payments of a mortgage or loan if you are without an income due to sickness, accident or unemployment, however most people sold it could never make a legitimate claim, therefore it was massively missold.

Mortgage protection insurance covers the outstanding mortgage loan if one or both of the policyholders dies (suicide excluded) during the policy term.

I await correction if I am wrong.





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03 Aug 2017 11:05 AM by windtalker Star rating. 1822 posts Send private message

Baz1946 you are correct ...but what you will find is that the mortgage company will not give you a mortgage without some sort of assurance that the mortgage will be paid if you come out of work or the likes.





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03 Aug 2017 11:15 AM by Donald1966 Star rating. 14 posts Send private message

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Hello Windtalker

** EDITED **where do you get all this misinformation from?.

 


This message was last edited by eos_moderators on 8/3/2017 3:38:00 PM.

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03 Aug 2017 12:03 PM by windtalker Star rating. 1822 posts Send private message

Donald1966 a mortgage broker will find it extremely difficult to source a mortgage  with no assurance protection in place... would you lend Dick and Diado €200,000 with no assurance that they will make a mortgage payment on time in the event of coming out of work or the likes...it is called belt and brace's business.

 


This message was last edited by windtalker on 03/08/2017.



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03 Aug 2017 12:55 PM by baz1946 Star rating. 2259 posts Send private message

Baz1946 you are correct ...but what you will find is that the mortgage company will not give you a mortgage without some sort of assurance that the mortgage will be paid if you come out of work or the likes.

Yes, Windtalker, fully aware of what you say and how mortgage companies work, I answered your post because you said it was illegal to sell PPI in the UK, I know you deleted your comment afterwards, but anyway their you go no problem.

 





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03 Aug 2017 3:40 PM by eos_moderators Star rating in España. 170 posts Send private message

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Please be respectful and avoid all insults. Thanks you.



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03 Aug 2017 3:57 PM by Donald1966 Star rating. 14 posts Send private message

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Hello Windtalker,

Council of Mortgage Lenders Representing 97% of UK mortgage lending 2017

Protection insurance

There are various different types of protection insurance designed to cut in to provide an income (to help you meet your mortgage payments) if you were ill and unable to work as normal. Some of these are designed to cover relatively short periods, others are designed for the long term. Some may protect you if you get certain types of illnesses.

Although such insurance is optional, it is worth noting that the State benefit available if you get ill and cannot meet your mortgage payments is far from comprehensive - you should not assume benefits would give you adequate protection to ensure that your mortgage is paid.

Windtalker, whilst the moderators have asked members to avoid insults which we must respect, I believe you are just making statements up for a laugh.

 


This message was last edited by Donald1966 on 03/08/2017.

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03 Aug 2017 5:17 PM by Curt2444 Star rating. 2 posts Send private message

Thanks for the comments

Ive done a bit more research ,I asked the Bank if it was Law to take this out and the reply was NO, but no bank in Spain will give you a mortgage without this being taken out , Now this is a bit dishonest from the bank as ive spoke to a financial advisor and said rubbish its a PPI ,Lot of Commision for the Bank staff me thinks ,

I agree banks have to cover themselfs. but With a 40 Percent Deposit that should be ample ,Banks are a business and have to limit there gamble but to Charge 34000 euros with a 3.5% over 20 years is a bit much





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