What kind of insurance do I need if my mortgage is Interest Only?
You should take out Life Insurance in association with
your mortgage.
Normal Life Insurance will provide the type of cover you
need to protect an Interest Only Mortgage. This is basically
a mortgage where the monthly premium pays just the interest and the capital
sum is paid off at the end. Because you repay the whole of the capital
amount at the end of the mortgage your Life Insurance needs to cover the
whole amount borrowed for the full term of the policy. This is also known
as level cover life insurance.
A Repayment Mortgage is different. Mortgage
Life Insurance is designed to provide the kind of decreasing
cover required in this case.