Getting a mortgage in uk

[shotis]

I need you advice.. I live and work in uk and wanted to get a mortgage as a first time buyer .  What sort of question can i expect from lenders and vice verse.  One thing I know however is that they will ask me to take out a life insurance but want to avoid that due to my status, how should i go about it withou revealing too much information that i do not need the insurance.

[newt]

If you don't need the insurance, don't buy it. You can get a mortgage without it. For a standard mortgage the only health question you may possibly be asked is do you smoke. They will be more interested in your employment status, income etc. A decent mortgage provider will not ask about your HIV status.

- matt

[Inchlingblue]

In the US the way it usually works is if a person puts a down payment of 20% or higher they do not have to get insurance but if it's lower than 20% they have to get mortgage insurance, not life insurance.

Are you saying that in the UK they require life insurance? This seems odd, it's probably mortgage insurance, isn't it?

[tednlou2]

In the US the way it usually works is if a person puts a down payment of 20% or higher they do not have to get insurance but if it's lower than 20% they have to get mortgage insurance, not life insurance.

Are you saying that in the UK they require life insurance? This seems odd, it's probably mortgage insurance, isn't it?

I've never heard of having to get life insurance for a mortgage.  Also, are you sure about the mortgage insurance if you put down 20%?  I had to get mortgage insurance.  Isn't this true for every mortgage until it is paid off?  If your house burns down, there is still 80% needing to be covered.  I will have to ask my gay realtor about this.

[Okealyshire]

I've never heard of having to get life insurance for a mortgage.  Also, are you sure about the mortgage insurance if you put down 20%?  I had to get mortgage insurance.  Isn't this true for every mortgage until it is paid off?  If your house burns down, there is still 80% needing to be covered.  I will have to ask my gay realtor about this.

Don't confuse mortgage insurance (often called PMI, private mortgage insurance) with property insurance. Your property insurance policy -- which pretty much all banks require, and you pay for separately from the mortgage -- covers losses like theft, fire, collapse, hail, that kind of thing.

Mortgage insurance is a policy that many banks force you to buy to protect the bank in case you default. Typically they require this if your down payment is less than 20% of the loan value; your monthly payment to the bank includes the additional monthly mortgage insurance premium. IMHO, mortgage insurance should be criminalized. The banks are doing it because the law allows them to, as a way to squeeze more money out of you.

[madbrain]

I've never heard of having to get life insurance for a mortgage.  Also, are you sure about the mortgage insurance if you put down 20%?  I had to get mortgage insurance.  Isn't this true for every mortgage until it is paid off?  If your house burns down, there is still 80% needing to be covered.  I will have to ask my gay realtor about this.

It is correct - no need for mortgage insurance if you have more than 20% downpayment. Or you can finance with two mortgages, and as long as no single one is over 80%, no PMI is needed. I bought my place with only 7% down, one 80% mortgage, and a 13% second mortgage, and never had to pay PMI.

I think the UK is quite different though. My family in France mentioned that health conditions would be taken into consideration for obtaining a mortgage over there. They were quite surprised when I told them it is not here. I think it is strange for health to come up, given that the house is collateral, and if you die, the bank can repossess the house anyway .

[tednlou2]

In the US the way it usually works is if a person puts a down payment of 20% or higher they do not have to get insurance but if it's lower than 20% they have to get mortgage insurance, not life insurance.

Are you saying that in the UK they require life insurance? This seems odd, it's probably mortgage insurance, isn't it?

I apologize for doubting you.  Thanks madbrain and Okealyshire for correcting me.  I did confuse property insurance with mortgage insurance--a good reminder to read more carefully before posting.  It is also a good reminder to see if I have mortgage insurance--I don't even know.  I had been planning to call to see what would happen with gay partners if something happened to the one who's name it is in.  I know about x-fer of title that can be drawn up.  I was wanting to find out if the house would be paid off in the event of death or if ya have to take out insurance for that. 

Thanks for this post.  It brings up good questions and reminds me I need to find out what's what.

[Dsd09]

It is not neccessary to have life insurance attached to a mortgage in the UK, and most providers no longer make it compulsory.

Halifax and Santander are good places for this sort of first time product. You will require a repayment mortgage, as interest only type (where linked to an endowmnment or life insurance) would generally not be available (that I know of).

In addition, you actually can arrange life insurance while HIV+ anyway through Prudential (you need to get it via a broker), but must have CD4 > 350, VL Undetectable and be on meds. I believe there are also one or two other providers, but I'm not sure how much the premium would be hiked though.

The best bet would be to seek specialist advice from an HIV friendly finance company such as Compass, or via THT.

Let us know how you get on, I would be interested to know how this works out for you

[Inchlingblue]

I apologize for doubting you.  

For that you deserve to be spanked.

[TabooPrincess]

You don't need life insurance to get a mortgage - the only insurance they will insist on is buildings insurance (which would be daft not to get!).  It's advised that you make a will but still not necessary.  I didn't get asked any health questions when I got my mortgage - they were only interested in my salary.

[UK_SL]

House / contents insurance would not involve disclosure.
The higher lending charge would be a fee the mortgage lender would charge if your were borrowing at a high loan to value, which allegedly goes towards their insurance cost for their "risk", again no disclosure.
If you have a full repayment mortgage, you may want to to take out something like a term policy, which covers the balance at the time of your death, should you die during the life of the mortgage, and for that you would need to disclose any health issue.
If you have an interest only mortgage you might want something like an endowment policy which would cover the balance either for death during the mortgage term or the full balance (supposedly) on maturity, again this would require health issues to be disclosed.
Accident, sickness and unemployment policies and income protection varies, but a financial advisor could talk you through that. Someone has already mentioned THT who are excellent for advice (I've used them!)
My partner works in the mortgage arena, and she can see no reason why the mortgage company would need to know your status.
If you are the sole named borrower, in the event of your death the mortgage company would want to know who the personal representative of the borrower was in order to deal with the account. This would not necessarily be the beneficiary, and it is always advisable to make a will just so things are sorted out should the unexpected happen.
If you are joint borrowers, it depends on how the title is held at the Land Registry as to how the mortgage company would deal in the event of either borrower. This is arranged with your solicitor: either you would be joint beneficial tenants which would mean that the title to the property and the mortgage account would pass immediately into the name of the survivor, or you would be tenants in common and the title and mortgage would then be in the survivors name and the pers reps of the deceased. The solicitor would advise you of the implications of this prior to the completion of the mortgage.
At the end of the day, the only insurance you are obliged to take out is buildings cover, so I really don't think you have anything to be concerned about.

[tednlou2]

For that you deserve to be spanked.

I would probably like that!  Maybe I need to doubt you more..lol.  Seriously, thanks for setting me straight...or gayly forward.  That doesn't look right.  Maybe it is gayle.

[shotis]

Thank you all for your support and advice. I will keep you informed with the outcomes as soon as I get started.

[shotis]

The last time I asked this question seven months on I am still nowhere.  Well what happened is, my friend who does not know about my status introduced me to her mortgage broker/advisor. I went along and met this guy. During our initial meeting the guy explained all the details in relation to the mortgages, in the process he asked me about any preexisting medical conditions, obviously I shook my head. Now he is insisting on get a life and critical illness insurance with to cover the mortgage despite me telling him that I will sort this out myself. I have contacted its so easy and they are willing to find a quote for me. How do I get myself out of this one then. The guy is from my country and guaranteed i will be the talk of the diaspora in UK if i disclose my status to him.

[newt]

Simply say that you want a simple repayment mortgage and no insurance products. End of story.

You are the customer, it's your position to insist, not the broker's.

- matt

[Realist]

Shotis. Sorry you are having some difficulty. I am not a regulated financial advisor so cannot give you "approved" advice or recommend a product to you but I can give you the benefit of my own experience.

In terms of insurance - it is in a brokers interest to sell you policies for insurance and other products. Sales = commission. If you do not want to proceed, simply tell the broker you have changed your mind. You are under no obligation - contractual or moral to proceed. Personally I would not use a broker to obtain a mortgage as its just as easy to do it yourself, but requires research.

Generally within the UK, standard high street banks will require a life insurance policy when securing a mortgage but most building societies do not and you are better starting with these. It is possible to obtain a mortgage application form from a lender without needing to proceed with an application and you can satisfy yourself with the questions being asked. No lender can ask you about your health for a mortgage application which is not linked to an insurance policy. They will of course ask you about your income etc. My principal mortgage is with Chelsea Building Society and they requested no medical details when I took out my mortgage and no insurance. An example of the application form for Chelsea can be found here: http://www.metrofinance.co.uk/applications/chelsea.pdf

There of course also other lenders available, such as:

Nationwide: http://www.nationwide.co.uk/nr/rdonlyres/a48ffc87-7e29-4ea6-b24d-2720746c5d9e/0/m1inov06.pdf

Leeds Building Society: http://www.leedsbuildingsociety.co.uk/introducers/pdf/app_form.pdf

etc

[Note that most of these forms are for use by intermediaries or brokers and you should contact the institution directly for their standard application forms]

As a general rule mortgages and loans are about your ability to repay, not your health and you do not have to disclose your status for these. Insurance (life, critical illness and medical) are about health and require disclosure but the two are not intrinsically linked. You can have one without the other.

I have more than one mortgage in the UK and none of them requires a life insurance policy or a critical illness policy. Most lenders only want you to have buildings insurance in case you burn the place down and the good ones will let you arrange this with any provider and not link you to their own insurance. Again for buildings insurance, this has nothing to do with your health. It is about the property.

Hope this helps.