What happens if one of us dies between exchange & completion?

[cakehoover123]

We've exchanged (yay!). I'm now stressing about what happens if one of us dies between exchange and completion - would we lose the deposit?

I'm wondering this because presumably the mortgage company would withdraw their offer, as neither of us could pay the mortgage alone. But presumably we'd still be required to complete on the date specified, or lose the deposit.

Would it therefore be advisable to get life insurance just for these few weeks, to avoid the risk of losing the deposit?

We weren't planning to get it otherwise, as once we've completed, if one of wasn't around we'd just sell the house.

Do you have death in service via workplace pension? Dh and I get 4x our salary if we die, which currently would clear our mortgage and give the same again in remaining funds.

It's not necessary - I have a mortgage and no life insurance (because my death in service through work more than covers the mortgage)

When I was buying on my own I refused to get any sort of life assurance as I didn't see the point of paying out premiums for someone else to benefit from, especially as my death in service benefits would have more than covered any mortgage - I wasn't going to add an extra financial burden when things were tight.

And even a couple of years ago, insurance wasn't part of the mortgage requirements. I think that some people may have thought it was when it gets pushed by the bank/mortgage advisor because it brings in commission for them. You have to weigh up if it's needed for your circumstances

Thanks for all the answers!

• Life insurance is not a condition of the mortgage offer
• Neither of us has death in service benefits
• We have no reason to think either of us might die imminently (thankfully!)
• If one of us died after completion, the other person could cover the mortgage for a bit and then we'd just sell the house whenever it made financial sense, as it's too big for one person, so we don't really need life insurance then.

It's losing the 10% deposit I'm worried about.

@TheSnowyOwl when you say people are usually understanding and will dissolve the contracts - is that based on experience?

Why don't you want life insurance?

I don't why you are worried about 10% not 100%.

Back in the day it used to be compulsory - and oddly enough the mortgage lender would also sell you your life insurance!
Now it’s not mandatory, but not having it would be very foolish.
OP, you can get reducing life term insurance, which is much cheaper.

@Soontobe60 That must have been before 1984 when I got my first mortgage then, and before 1982 when my landlady got hers because we discussed it and she was of the same opinion as me (or perhaps she helped form my opinion, not sure!)

My cousin's husband died between exchange and completion on a new build. The builder was very understanding and let her change to a smaller property without extra charge. However insurance is the way forward.

It absolutely is not on our mortgage nor on any mortgage I’ve previous had (about 6 in total)
HOUSE insurance is

however, life insurance is an extremely good idea. I don’t think its necessarily a must though, depending on your wider financial circumstances

Interested: I am single without dependents. I would have no one for the life insurance to pay out to! Would your mortgage company still insist on this, I wonder?

Yep, buildings insurance is compulsory.

Life insurance hasn't been mentioned on either mortgage we've had. I'm asking about life insurance, in case it isn't clear.

Check whether you have death in service benefits at work. We've always had jobs where we would until recently, and the amount paid out would cover the mortgage, and proof of that was enough for the mortgage provider. I have life insurance now which just repays the outstanding mortgage amount if anything happens to me, and it's about £12 a month.

Please get life insurance. Ours is about £7 a month each and we'd both get a pay out (to help with kids). Even just enough for the mortgage balance, ours is decreasing term, that's quite common, as the balance reduces each year.

DH has death in service insurance at work with me as beneficiary, I meant to say also.

Life insurance won't be a condition of the mortgage but i absolutely cannot see your reasoning for not intending to get it, I'm sorry- its cheap (especially relative to house purchasing and running costs) and can make all the difference at the worst possible time. When you lose your life partner "just selling the house" moving and starting again is massive.

Please think again (and get Wills written too).

Also, from experience- if the worst happens between exchange and completion some chains will be understanding and you will be able to walk away relatively (financially) unscathed, others not so much.

I used to think death in service benefit would cover us, until one of DHs colleague had a lengthy and protracted illness. Despite really not being fit enough to work, he had to remain there as death in service was their only life cover and if he gave up work, obviously he would no longer be "in service".
Fortunately the company were very understanding but I don't think he would have spent his last year's doing what he did if he had any other way of securing his family's financial future.

Life insurance (in this instance) is to pay off the mortgage, not to pay out to dependents.

OP - just go online and do a life insurance comparison thing and buy an inexpensive life insurance policy for the value and term of the mortgage. It won't cost a lot pm. If one of you dies after completion, you will still be in a financial mess so best to have the insurance.

@Chewbecca If you're dead the house can be sold to pay off the mortgage, you don't need a life policy to pay it off, and you don't need anywhere to live because you're dead.

Only if you are single. And even if currently single you might meet someone in the future. Life insurance is cheaper the younger and healthier you are.

Agree about the death in service benefit- what happens if you change jobs

But you might not meet anyone. And if you did, you might have paid it off by then. You might also move house and you might have to take out a new, different policy for a different amount. @Flensburg asked the question because Flensburg is single with no dependents.

Lots of if, might and buts there! You make a decision based upon the circumstances that suit at the time. And for single people, taking out a policy isn't always the most financially clever move

Do you both have pensions savings, and don't yet draw your pensions? If so your pension pot could perhaps cover?
I have a small pension of £25k I'm keeping (because it'll pay out peanuts per year) for now, but should I die then it pays out the full £25k in there (whereas if I'd started drawing pension, it won't). Which should cover a few things and a funeral, and it's cheaper than paying for life assurance being over 60 (we have paid off mortgage).

Which company is this with?

£12 a month is great! Our best quote was £65 per month (to cover £550k). We're only in our 40s, don't smoke and no health problems either!

Thanks for the comments. As above, it's only the exchange to completion part I'm worried about - don't think it's worth paying £800/year after that, as we'd want to sell up anyway if anything happened.

But I will probably go ahead and get cover for this bit.

Just get life insurance from Exchange onwards and then cancel it once you’ve moved in if you want to 🤷🏼‍♀️

@Twiglets1 yeah, that's what I'll do thanks. It's £65 and a ton of paperwork but worth it.