Buying your first home is one of life’s most exciting milestones. After months of searching, saving, and paperwork, you’re finally holding the keys to a place you can call your own. But alongside the excitement comes a significant financial responsibility: your mortgage.
For most first-time buyers, a mortgage is the largest debt they’ll ever take on. And while nobody wants to think about the worst-case scenario, it’s worth asking: what would happen to your home if you were no longer around to make the payments?
This is where life insurance becomes an essential part of the home-buying journey.
Why first-time buyers should consider life insurance
Life insurance isn’t a legal requirement when you take out a mortgage in the UK. However, many lenders strongly recommend it, and some may even require it as a condition of your loan. The reason is simple: if you were to pass away before your mortgage is paid off, your loved ones could be left with a substantial debt—or worse, they might have to sell the family home.
With life insurance in place, your policy would pay out a lump sum that could be used to clear the outstanding mortgage balance. This single action can lift an enormous financial burden from your family during an already difficult time.
Which type of life insurance is right for you?
For first-time buyers, there are two main options to consider:
Decreasing term insurance is specifically designed to protect a repayment mortgage. The cover amount decreases over time, broadly in line with your outstanding mortgage balance. Because the payout reduces, it’s typically the most affordable option.
Level term insurance keeps the payout amount the same throughout the policy term. This is ideal if you have an interest-only mortgage or want to leave extra funds for your family beyond just clearing the mortgage.
The earlier you start, the better
One of the biggest advantages of getting life insurance as a first-time buyer is your age. Premiums are largely based on how old and healthy you are when you take out the policy. Lock in cover while you’re young and healthy, and you could save thousands over the life of your mortgage.
Waiting until later in life—when health issues may have developed—often means higher premiums or even difficulty getting cover at all.
At Cover Direct, we help first-time buyers find the right protection for their circumstances. Our advisers take the time to understand your needs and search the whole market to find a policy that fits your budget. Get in touch today to start your journey.
FAQs
Q1: Is life insurance mandatory when getting a mortgage?
A: No, life insurance is not a legal requirement to get a mortgage in the UK. However, some lenders may require it as a condition of approval, and it’s widely recommended to protect your family and your home. Without it, your loved ones could struggle to keep up with mortgage payments if you were no longer around.
Q2: What’s the difference between decreasing and level term insurance?
A: Decreasing term insurance reduces in value over time, matching your shrinking mortgage balance—making it cheaper but only covering the debt. Level term insurance maintains the same payout throughout, which suits interest-only mortgages or those wanting extra funds for their family beyond the mortgage.
Q3: Why is it cheaper to get life insurance when I’m young?
A: Insurers calculate premiums based on risk, and younger, healthier people present less risk. By taking out a policy early, you can lock in lower premiums for the entire term. Waiting until you’re older—or until health issues arise—typically results in significantly higher costs.
