Life Insurance

[supamac]

Hi all
Mr Mac and I are once again astonished at the cost of life insurance to cover the mortgage on our apartment. On property we rent out in the UK we take the view that if one of us dies and the mortgage cannot be met for some bizarre reason, then the building society has the security of a charge over the property and can sell to recover our debt to them. So we don't buy life insurance as there is simply no need.

In PP, it all started 3 years ago when on completing the purchase of our apartment at the notary's office (and I thought I had done a serious amount of homework), the first we knew about ANY life insurance being required was when Anna at Bancaja asked us to each sign for the policies and the cost of each was about 750 euros!! We complained that this was very bad business form and that we may not have taken the mortgage with them had we known this in advance. She said she would see to it that we didn't have to pay the next year but her memory failed her despite me reminding her every quarter and on the anniversary, another 1500 euros was taken (with apologies and flaky explanations from Fabio) and in year 3, here we are again.
We have asked so many questions but feel we are being fobbed off though I have just managed to achieve a 200 euro reduction (woohoo!) from Fabio at the bank.
The alternative is that they want a deposit of 3 year's worth of mortgage payments in case when one of us dies, the other runs off and 'forgets' to pay the mortgage!! To be honest I'd rather invest that sort of money and get a better return elsewhere than Bancaja enjoying the fruits of my cash!!
I had thought they would feel safe in the knowledge that if we did bugger off, they still have a charge over the apartment and could recover their loan.


Is this just a big money maker on the back of non-residents or what?

Any ideas about how to get the best deal out of this matter?

Sue

[cherylbb]

Hi Sue,
found a couple of articles which may help, may not...

''Buying property in Spain with a mortgage will require you to take out a Home Owners Insurance Policy and a Life Insurance policy.

Non-resident owners of holiday homes may choose a UK based house insurance provider rather than one based in Spain. This will avoid having to translate foreign policy documents and understand unfamiliar foreign property legislation. There is also the consideration of how you will use your holiday home. Will it be left empty for long periods? If so, are there reductions in cover?''

And listed under top 10 Common Abusive Clauses in spanish mortgage loans....

''Bank charges for non requested services which are tagged on to the mortgage loan - This happens when on signing the mortgage loan the lender throws in a bunch of unrequested services such as life covers, home insurance, pension plans or non requested credit cards. This is null and void as per Additional Disposition number 10.23 of LCGC.

Having said this, the reason why an offered mortgage loan may be so competitive is only because the lender has added in these unrequested services which help to offset the financial shortfall for the loan itself. On removing them, the lender will immediately raise the applicable interest rate.''

[supamac]

Hi Cheryl - thanks for trying to help. I'm going to ask what another 1% on the mortgage would cost as I believe that was an alternative when we queried it at the notary. This way it's costing about 167 euros a month extra. Sue

[Quelys]

This also happened to us two years ago (I'm a resident and my husband is Spanish). In the end we were committed to 'buying bulk' - 5 years worth of life insurance or no mortgage would be given. The total cost was actually added to our mortgage. They wanted us to sign for 30 years life insurance (the length of the mortgage) but I managed to get out of that one!! We also had to take out a protection of payment insurance (in case one of us lost our jobs) and household insurance (at not a very competitive rates). I'll be shopping around when they expire - you are bound to find better deals even in Spain!

A very big money maker but not just on the back of non-residents.

[supamac]

Thank you for replying! There must be a cheaper way so we're on the case!