Re-mortgaging? Check your life insurance still fits your new mortgage
Quick answer: When you re-mortgage, your life insurance stays exactly as it was. If you borrow more, extend your term or change repayment type, your cover may no longer clear the mortgage. Check your cover whenever your mortgage changes, and keep your existing policy until any new one is in place. Clarity Mortgages & Protection in Altrincham reviews mortgage and protection together, fee-free.
When clients re-mortgage, they focus on the rate. That's understandable. But there's a question almost nobody asks: does my life insurance still match my mortgage?
Your protection was set up to fit the mortgage you had at the time. Re-mortgaging can change the size, length or shape of that mortgage. Your policy won't change with it unless you change it.
Four changes that can leave a gap
1. You've borrowed more
If you've released equity for an extension, a new car or to help family, your mortgage is now bigger than your cover. If you died, your family could be left with a balance the policy doesn't clear.
2. You've extended your term
Many people extend their term to keep payments down. If your policy ends before your new mortgage does, you'd have years of mortgage with no cover at all.
3. You've switched to interest-only, or part of it
Decreasing cover assumes your balance falls over time. On interest-only, it doesn't. You'd usually need level cover for that part.
4. Your life has moved on
New children, a new partner or a change in who lives in the home can all mean the right amount of cover has changed too.
Re-mortgage changes and what they mean for your cover
| What changed | Possible gap | What could help |
|---|---|---|
| Borrowed more | Cover is lower than the mortgage | A top-up policy for the extra borrowing |
| Longer term | Cover ends before the mortgage | New cover running to the new end date |
| Moved to interest-only | Decreasing cover falls while the debt doesn't | Level term cover for the interest-only part |
| Same mortgage, same term | Often none | A quick check is still worth doing |
This table is a general illustration. The right fix depends on your existing policy and circumstances.
Don't cancel your old policy too soon
If you do need new cover, keep your existing policy until the new one is accepted and in force. New premiums are based on your age and health now. If your health has changed, your existing policy could be the more valuable one, so a top-up may be better than starting again.
Re-mortgaging is the perfect time to check
You're already reviewing your finances, so it takes very little extra time. At Clarity, we look at your mortgage and protection together.
If you're coming up to a new deal, read Your fixed rate is ending: what Altrincham homeowners should do next. And if you're still deciding whether to move at all, it's worth reviewing the mortgage itself first.
Frequently asked questions
Does my life insurance change when I remortgage?
No. Your policy is separate from your mortgage, so it carries on as it was, even if your mortgage changes.
Do I need new life insurance with a new lender?
Not necessarily. Your existing policy usually still applies. You may only need extra cover if your mortgage has grown or got longer.
Should I cancel my old policy and take out a new one?
Not without advice. Your current premium is based on your age and health when you took it out. Replacing it could cost more.
What if my protection was set up by a different adviser?
That's fine. We can review any existing policy alongside your remortgage.
Does it cost anything to speak to you?
No. We don't charge a fee for our advice.
Remortgaging in Altrincham, Trafford or Cheshire? If your mortgage has changed — or is about to — it's worth ten minutes to check your cover still matches it. Get in touch to review both together; our advice is fee-free and there's no obligation.
About the author
Matthew Horan CeMAP is Principal of Clarity Mortgages and Protection, with over 10 years' experience helping individuals, families and business owners protect their income, homes and businesses.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
This article is general information, not advice. What's right for you depends on your own circumstances and your existing policy.
