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Mortgage Transfer Life Policy Issue

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  • 21-02-2023 3:19pm
    #1
    Dev1234
    Registered Users Posts: 151 ✭✭


    Hi, apologies if this has been asked elsewhere but I am in the process of moving my mortgage from one provider, X, to another, provider Y.

    Provider Y wants provider X removed from life policy as an assignee and replaced with them prior to drawing down funds. My life policy provider wants a letter for mortgage provider X stating that they no longer have an interest in the property which, of course, they won't do until they get their funds. My life policy provider will only maintain one interested party on the life policy.

    Both my mortgage broker and provider X have said that in this situation my solicitor typically takes an undertaking that the policy will move from X to Y upon draw down. My solicitor has stated that they will not take an undertaking on something that they can't control i.e. me following up with my life policy provider to ensure it is updated with the correct mortgage provider, so I'm a bit stuck!!

    Has anyone else been in this situation? It's a bit of a chicken and egg scenario and I'm sure I can't be the first to experience it!!

    Any path forward or guidance on how others have overcome this would be greatly appreciated!!!

    Thanks!!



Comments

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    #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,672 Mod ✭✭✭✭Henry Ford III


    Could you take out a new policy? The sum assured and term most likely will be wrong from the existing one.



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    #3
    Dev1234
    Registered Users Posts: 151 ✭✭Dev1234


    https://www.boards.ie/discussion/comment/120270454#Comment_120270454

    Thanks HF. I was hoping to avoid having to get a new policy given some personal circumstances but it may be my only path forward.

    Are both my mortgage broker and current mortgage provider incorrect when that say that my solicitor could take an undertaking to ensure the life policy is moved? They were both fairly surprised that my solicitor wouldn't take the undertaking but my solicitor has categorically stated that they won't be taking such an undertaking. Maybe it differs from solicitor to solicitor?



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    #4
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,672 Mod ✭✭✭✭Henry Ford III


    I'm not sure tbh. The only thing I do know is that you aren't the first person in these circumstances so there must be a way of doing this effectively.



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    #5
    ohnonotgmail
    Registered Users Posts: 40,288 ✭✭✭✭ohnonotgmail


    Just take out a second policy. end the first as soon as the mortgage is transferred. it wont cost you very much.



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    #6
    Dev1234
    Registered Users Posts: 151 ✭✭Dev1234


    Thanks folks. I'll give it till the end of the week to see if there is a way around having to get the second policy.

    If not, I will have to be the bullet and go for it.

    Thanks again!!



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    #7
    kippy
    Registered Users Posts: 18,472 ✭✭✭✭kippy


    I can see why the OP may not want to take out a new policy at all. It's possible their health situation has changed since taking out the initial policy and more than likely a new policy will cost them more, and incur a level of administration that could be avoided.

    You can't be the first person to find themselves in that position. There has to be some legal contract drawn up or used in that scenario.



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    #8
    Dev1234
    Registered Users Posts: 151 ✭✭Dev1234


    https://www.boards.ie/discussion/comment/120271917#Comment_120271917

    You've summed it up well kippy!!

    That's the situation I'm in and I wasn't expecting that I would be pretty much forced to get a new life policy as a result of switching mortgage provider.

    I'll keep at it and hopefully there is a path forward.



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    #9
    daheff
    Registered Users Posts: 5,851 ✭✭✭daheff


    Had something similar happen. Pragmatic view around it from all parties and it was fine.


    Ask your solicitor to talk about this with the lender and to make changeover on life policy a condition subsequent to drawdown. Lender has minimal risk here as even should you die, they have property title deeds and there should be a limited time between draw down and rectification of interested party clause.



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    #10
    kippy
    Registered Users Posts: 18,472 ✭✭✭✭kippy


    https://www.boards.ie/discussion/comment/120273202#Comment_120273202

    If for some reason you do need to take out a new policy, I would recommend that you hold onto the existing one (you can remain paying into the policy for cover with it not assigned to the bank etc)

    It's the cheapest cover you'll have in the event of something awful happening although granted it is a reducing policy.



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    #11
    Dev1234
    Registered Users Posts: 151 ✭✭Dev1234


    Thanks for the replies folks. Looks like we have come to an agreement. After much back and forth my new mortgage provider is willing to accept an undertaking by me, signed and dated, that I will transfer the life policy once the mortgage has been drawn down. Similar to your own experience daheff.

    It took a while to get to this point with them, the overall switcher process has been a nightmare that has dragged on for months so hopefully this will be the end of it!!

    Thanks again for all the replies!!



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