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  • Insurance

    Are you considering the future?

    It's easy to accumulate a huge amount of debt when you are in the property/landlord business. It only takes a few houses to end up owing a million pounds in debt.

    Here's a fact that most people will either shy away from thinking about or kid themselves into believing that its not going to happen to them:  You are going to die. Horrible to think about all the heartbreak that would happen around it but it's true. 

    In the event of the death of a borrower, even if it’s a joint mortgage, it is usually well within the rights of a mortgage lender to call in their mortgages.

    Ouch, so not only have your family had to deal with the loss of a loved one and possibly the main provider, but also, have now got to deal with either finding a huge amount of capital to pay off the debt, or going through the rigmarole of selling the houses. Once sold, the income from that property is gone too. Is that in their best interests?

    Is it worth risking all of this for just a few extra pounds per month?

    As an example, I am a Financial Adviser, 35 and living in Colchester, Essex. Non smoker/drinker. Say I owed £1.5 million in my portfolio of houses, my premium for a death cover would be somewhere in the region of £74 per month with a great company such as Royal London.

    Now, forgive me for being blunt but wouldn't you say that's a bit of a 'no brainer'? 

    Each quote is personal, get in touch for a quote and see how easy it is to cover your vulnerabilities.

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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209

    Why would it be in the lender's best interest to call in the mortgage provided it's still being paid?

    Repossessions are hardly cheap, doesn't seem like the path of least resistance to them..

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    Understood, however it's still in their rights to do this unfortunately.  

    For example, what if the mortgage/s was/were pivoting on the trust and initial proof that the deceased person could achieve the repayments? Why would the lender decide that its ok to risk having to go through the missed payment/repossession route if the new owners couldn't afford to upkeep the payments?  More to the point, why would the surviving family want to have to deal with the whole process of being vetted for affordability etc? What if they fail? What then...

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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    I asked this question to my Mortgage Broker a long time ago

    and the answer I got is Most Lenders if not all will work with the Estate to re orginse outstanding Mortgages 

    Saying that I have take life insurance out to cover some of my Mortgages 

    so My family have a pot of cash to have at hand to re arrange the loans

    The question I have on this one is If the Landlord is a Director with there wife with a Limited Co do the mortgages have to be repaid if a director dies

    my gutt feeling is most likely no because its a company mortgage and the shares would be passed to the wife or another member of the family

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Usually, the mortgage would be granted to the LTD company.  

    I think as you say, the biggest thing is that you wouldn't leave anyone in financial instability.  No one wants a debt given to them, even if its to the LTD company!

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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    The initial post is somewhat fudging the issues around Residential vs BTL mortgages.

    That said there will no doubt be more borrowers without any mortgage protection Ins after demise of Endowment Mortgages.

    On the plus side for those looking to buy life cover products - premium rates have never been lower.

    Counteracting those thin rates though will be far stricter underwriting for new applicants - and whereas 30 odd yrs ago some 95% of applicants were accepted at standard premium rates after going through the underwriting processes - rather more applicants nowadays will be charged an extra premium - often for risk factors rather than overt disease eg obesity (BMI over 30) or clinical obesity (BMI over 40) which are far more prevalent today. That said - applicants who are "rated up" should take the hint that they are the ones more likely to become a claim - as well as taking opportunity to address any flagged health issues.

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    Not at all, whether it is a BTL or a residential mortgage, it's still a debt and should therefore be covered. Someone has to pay it off and if not the original person, who then? 

    I like your other point though, maybe if the premium goes up after underwriting, it can be seen as a flag to that person. Also, isn't it better that someone who is at higher risk should be covered? 

    At the end of the day it boils down to this question:

    When you die, do you want to leave behind a debt or a house?
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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    There is a big difference to a widow and kids being obliged to sell the family home if mortgage is unaffordable on demise of "breadwinner" - whereas with BTL it is normally the expectation that any mortgage debt will need to be repaid either from rental profits or from capital growth when selling up - though both are of course debts which ideally can as you suggest be covered by cheap term life cover. Best to get cover while relatively young and fit - as raw mortality premium rates about double every 7 years from around age 40.

    There is of course increasing resistance from punters who have been rated up - the skill of a good salesman being to flag that they are in effect getting a better deal than the standard rates cases (most of whom will be subsidising the rated cases to a degree) though it is not uncommon for Olympic class athletes to drop dead in 20s/30s with eg latent cardiomyopathy/AVM etc.


    Industry stats suggest that majority of new residential loans are covered via some form of term life cover - and most also have CI cover these days - latter being very sensible as the incidence of morbidity exceeds mortality

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    I'm reading this and trying to work out if you agree with me or are being argumentative....

    Quite simply, life insurance, for any large debt, is ONE of the ways of making sure you clear said debt on death (or diagnosis of a critical illness if that is included). It just happens to be one of the cheaper options.

    Even if you died on the last day of your cover, you may have only paid in a fraction of the amount that gets written out. 

    For simples sake, if the premium was £100pm. You paid for say, 10 years and died on the last day, you would have paid in just £12,000 in that 10 years. If this covers off a million pounds of debt, what a cheap option with minimal hassle! Especially so if written in trust (as all life policies should be). 

    I have been asked before "what if I survive though?" 

    Bloody well done! Big Grin
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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    We are in agreement!

    Survival after buying cheap term life cover means one has had peace of mind for the cover duration.

    Worth reminding punters that over 91% of people in UK now survive to age 60 - sharp contrast to the mere 37% who survived to age 60 in 1948. We can all give thanks to the Victorian civil engineers who built the modern sewerage system which largely culled the 50% child mortality in late 19thC - and the guy who studied the mortality concentrations around various London streets - and found that locations with fewer deaths almost all comprised households working for the many local breweries who got free beer to drink and thus avoided drinking the toxic water. Without those advances and modern medical science mortality would be far higher and so would premium rates.

    Also worth flagging that SMI recently changed to an interest bearing loan which leeches equity until repaid - and that in general welfare has moved to funding a mere existence.

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    Life Cover written in trust is great and so so simple

    I will never be able to pay all my mortgages off .

    Cash flow from just one property gives a million of cover

    I call it affectionately  the House of Death

    What a beautiful easy to access present for the kids when you go to save them all that stress

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    Jonathan Clarke. http://www.buytoletmk.com