Why a first home changes the picture
Renting means a landlord carries the property. Buying means you carry a debt, often the biggest you will ever take on, and it is probably shared with a partner, a friend or a family member who helped with the deposit.
If you died with the mortgage still running, the person left in the home would have to keep paying it alone or sell. Life insurance arranged around the mortgage lets them choose to stay. That one decision is what most first-time buyers are protecting.
Matching cover to your mortgage
Start with the loan amount and the term on your mortgage offer. With a repayment mortgage the balance falls as you pay, so decreasing term cover can follow it down. Make sure the policy's assumed interest rate is at least the rate on your mortgage, or there could be a gap.
With an interest-only mortgage the debt stays the same until the end, so level cover fits better. If part of your loan is each type, you can split the cover to match. Your mortgage adviser can confirm the exact split, and we will match the policy to it so neither part is left short.
- Bring your mortgage offer or illustration to the conversation
- Check the loan amount, the term and the repayment type
- Think about whether you want cover for more than the mortgage
- Ask whether critical illness cover should sit alongside it
Timing it with exchange and completion
Once contracts exchange, you are committed to the purchase. Many buyers like to have cover agreed by then. Some insurers will give free cover between exchange and completion once your application is accepted, for a limited period, so the gap is closed.
You can apply as soon as you have a mortgage in principle. The insurer underwrites you now and starts the policy on the date you tell us. If completion moves, which it often does, we can move the start date too. You will not pay for a policy that has not started yet.
Buying with someone else
Couples often choose between one joint policy and two single policies. A joint policy pays once, on the first death, and then ends. Two single policies cost a little more but leave the survivor with their own cover still running.
If you are buying with a friend or a sibling, think about what each of you would want to happen to your share. A trust can direct the payout to the co-owner so they can clear the loan. A solicitor can also advise on whether you hold the property as joint tenants or tenants in common.
Costs beyond the mortgage
The mortgage is the headline number, but owning a home brings other bills a landlord used to carry. Buildings insurance, repairs, boiler servicing and, on many leasehold flats, service charges and ground rent all land on you now. If one income disappeared, those costs would keep arriving.
Some first-time buyers add a little extra cover above the loan to give the survivor breathing room for the first year. Others pair life cover with income protection, because a long illness can upset the repayments as much as a death, and in that case you would be the one who needs the money.
Critical illness cover can sit on the same policy or a separate one. It pays a lump sum if you are diagnosed with a condition the policy covers, which could reduce or clear the mortgage while you recover. Definitions vary between insurers, so compare what each one includes before you decide.
How Hi Tomorrow helps first-time buyers
Buying a first home brings a lot of paperwork, and we keep the protection side simple. We read your mortgage offer, recommend the type and amount of cover that fits it and compare the insurers on our panel for you.
We handle the application, keep an eye on your completion date and change the start date if the chain slips. We do not charge a fee for this advice. If your circumstances change after you move in, we can review the cover with you.