Having a life insurance policy in place can give you an advantage when it comes to positioning yourself infront of lenders, ie the banks. Here is what you need to know when it comes to using your life insurance policy as an advantage for a home loan.
Lenders look at your risk
If there are two things life insurers and lenders look at, it is the level of risk you hold. Lenders need to know that you will be able to pay off your home loan in the event of you dying. Most people will use an asset that they own as surety to pay off a loan to prevent it from being repossessed. However, having something like life insurance in place can make sure that any debt you may have accumulated is paid off and is not passed onto your loved ones.
Although it may not be compulsory for you to have life insurance when looking to buy property, it can make a difference in your home loan being approved. It is also an affordable way to ensure that your home loan is covered if you die. In some cases, a bank could offer you life insurance if you don't have a policy in place to approve you for a home loan.
Buying a home means that it is time to protect your financial future
Our lives move in stages; we plan on buying a car, a house, having children, or even branching out to start our own business. All of these require that you have a plan in place that will protect your future and the future of your loved ones.
Buying a home means that you have moved into a new financial bracket. It is also usually a sign of wanting to start a family of your own one day. Even if you don't plan on having a family of your own, protecting your partner and your home is equally as important.
The future is unknown, and life comes with many twists and turns, but there are proactive ways in which you can protect your financial future by having life insurance in place. You can read our blog post on how life insurance can be used to do this.
How much life insurance is enough?
Protecting your financial future is important, especially when you purchase a valuable asset such as a house. Knowing what the right amount is that you should be covered for is important. It can prevent you from underinsuring you and your loved ones, which can lead to disappointment when it comes to putting in a claim.
If you are not sure what is the right amount you should be covered for, you can use our life insurance calculator to make an informed decision. You can also apply for an obligation free quote online to estimate how much you will end up paying in premiums.
It is also important to carefully consider the implications that come with using your life insurance policy as surety for a home loan. Keep in mind that it is better to have life insurance in place, even if you do not have any dependents as it can also benefit you while you are still living and faced with a terminal illness.