Contrary to popular belief, you don't need to take out life insurance to get a mortgage. One of the main reasons people take out life insurance is to ensure that their families can continue to pay the mortgage, in the event of death. Your capital release offer will confirm that you must have current building insurance for the entire duration of your life mortgage. Technically, you don't need to take out life insurance (or declining life insurance, especially if you have an amortization mortgage) when you take out a mortgage.
However, it might be a requirement for some lenders. Legally, the only insurance you should take out is building insurance. A capital settlement provider will provide you with a lump sum or income in exchange for a portion of the value of your home. This is achieved through a type of mortgage or by selling that part of your house on the condition that you can continue to live there as long as you want.
Most people who apply for a capital release use a lifetime mortgage. However, some annuity mortgages now offer you the option to pay all or part of the interest, and others allow you to pay interest and principal. Just as ordinary mortgages vary from lender to lender, so do annuities. Many of the mortgage and financial advisors listed on Imbiased offer high-quality independent advice on capital release.
Generally, your capital release lawyers will ask you for a copy of your building insurance certificate. The Nationwide Construction Society describes capital release as unlocking the accumulated value in your home as a tax-free lump sum. Look for the Equity Release Council's approval mark to ensure you're using a trusted vendor. You must provide a copy of your building insurance certificate to the capital release lender to confirm that it is appropriate.
Freeing up capital may seem like a good option if you want some extra money and don't want to move out of your house. Freeing up capital can provide you with a large sum of money to spend while still allowing you to continue living in your home. To find out if you can get a capital release with us, contact us to set up a call with a UK-based equity issuance advisor. You should know that requesting any type of capital release will mean that you can leave a smaller amount to your loved ones.
As an additional security measure, ask your lawyer to review the agreement you have with the capital release company before you sign it. In addition, any mortgage life insurance recommended by your lender or mortgage broker is likely to be very expensive because of the amount of commission they will charge if you take it out. Capital release refers to a range of products that allow you to access the capital (cash) fixed in your home if you are older. Your financial advisor or mortgage advisor can help you decide if a capital release plan is appropriate or if you should consider other options, such as downsizing.
You don't need mortgage life insurance to apply for a mortgage, although it's a wise option for many borrowers.