Do I Need Life Insurance to Get a Mortgage?

When buying a home, many people ask whether they need life insurance when they get a mortgage. The short answer is no, it isn’t mandatory, but it’s one of the most important safeguards you can have when taking on a long-term financial commitment.

Lenders don’t require it, but they often recommend it because it protects your family and ensures the mortgage can be repaid if something unexpected happens.

Why Life Insurance Matters for Homeowners

Purchasing a home is likely your biggest financial step. A life insurance mortgage policy makes sure your loved ones can stay in the property if you pass away, removing the pressure of ongoing mortgage payments.

Without it, your dependants could face serious financial strain and even risk losing the family home.

Is Life Insurance a Requirement for a Mortgage?

Legally, no. You can take out a mortgage without life insurance, but most advisors recommend arranging it at the same time. It keeps everything aligned, your mortgage, your protection, and your peace of mind.

Some lenders may ask about cover as part of their responsible-lending checks, but they cannot make it a condition of your loan.

Types of Life Insurance for Mortgages

Decreasing Term Life Insurance:
Ideal for repayment mortgages. The cover amount gradually decreases as your balance reduces, keeping costs low.

Level Term Life Insurance:
Keeps the cover amount fixed throughout the term. Perfect if you also want to protect other commitments like living expenses or education costs.

Both forms of life insurance mortgage cover ensure your family isn’t left with debt if the worst happens.

What Happens Without Life Cover?

If you pass away without a policy, the mortgage still needs to be repaid. This could mean your estate has to sell the property, or your family may have to find other ways to cover the balance.

Life insurance gives you control over that outcome — ensuring the home remains theirs, not the lender’s.

When Should You Set It Up?

The best time to arrange life insurance mortgage cover is during the mortgage process, ideally before completion. That way, protection starts the same day you exchange contracts.

If you already have a policy, review it whenever you remortgage or move to make sure the amount and term still fit your situation.

The Bottom Line

You don’t legally need life insurance to get a mortgage, but it’s an essential part of responsible homeownership. It ensures your family stays protected, your home stays secure, and your mortgage doesn’t become their burden.