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The Ultimate Guide to Mortgage Protection in 2021

What is Mortgage Protection?

Mortgage protection insurance is a type of life insurance that you must buy when you get a mortgage in Ireland. If you or your partner dies during the term (years) of the mortgage, the mortgage protection policy pays off your mortgage’s outstanding balance.

Answers to Your 13 most Frequently Asked Questions:

  1. You don’t have to buy mortgage protection from the bank (no matter what the bank says). Always shop around and buy the policy that offers the best value and service 🤳
  2. Buying from a broker will not slow down your mortgage application (no matter what the bank says). In fact, brokers are generally quicker than banks (we certainly are) 👋
  3. If you add serious illness cover to your mortgage protection policy, the bank, not you will get any payout (the bank probably didn’t say that) 😲
  4. Dual life cover is better than joint life cover (and it’s the same price!). Avoid joint life cover. Dual life cover is not available through the banks. 😉
  5. If there are two people on the mortgage, you both need insurance for the full value of the mortgage (not 50% each) 👫
  6. If you’re buying as a couple but aren’t married, you should consider two single life policies to minimise potential inheritance tax liabilities 💕
  7. Your premium is fixed for the life of the policy.🔒
  8. You DO NOT NEED life insurance to draw down your mortgage; no matter what the bank says, all you need is basic mortgage protection. 🎉
  9. You only need to insure the mortgage amount (not the purchase price of the property). 🏡
  10. You don’t need to insure the interest payable on the mortgage, just the principal sum/amount you are borrowing. 🙂
  11.  If you have a health issue, speak to a broker before you apply because if your bank declines you, it will be harder for you to get cover elsewhere. 👋
  12. If you use e-cigarettes, the bank will charge you smoker rates (twice the price of a non-smoker). Brokers have access to preferential rates for vapers. 🚭
  13. Finally, you CANNOT get exclusions on a mortgage protection policy. The insurer will cover you for death due to any reason or won’t cover you at all.💸

Your Guide to Mortgage Protection Insurance in Ireland 2021

Oh, hello there, I’ve been expecting you; hopefully, it hasn’t taken you too long to find us.

But now, you can sit back, relax and find out all you need to know about mortgage protection before signing on the dotted line.

Welcome to THE most comprehensive guide to mortgage protection on t’internet.

  • Would you like to know where to buy the best mortgage life insurance policy?
  • How about why you should never add serious illness cover to your policy?
  • Or how to avoid 33% tax if you’re not married

You’ve come to the right place.

You don’t need to know everything there is to know about mortgage life assurance.

But if you read through these articles, you’ll know more than enough to get by…

What is mortgage protection?

Your starting point, if you read just one article, make it this one.

Mortgage protection in plain English

The one question almost everyone asks.

What’s the difference between mortgage protection and life insurance?

What’s the difference between mortgage protection and life insurance?

Ding ding ding – you’ve found the number one most frequently asked question!

Let me clear things up for you.

I prefer to call life insurance family protection because it leaves an agreed lump sum to your family to replace your income when you die. The payout amount is fixed for the term of your policy, so whether you die on the first or last day, the full amount will payout.

Mortgage protection covers the bank’s arse. It clears your mortgage on death. The amount of cover reduces at a similar rate to your mortgage balance.

Is mortgage insurance mandatory?

For a residential mortgage, the bank will insist on it before they issue your mortgage cheque.

In some cases, the lender may waive the need for life insurance:

Waiving the need for life insurance is at the bank’s discretion.

Mortgage insurance is not required for an investment/rental mortgage.

Do you have to buy mortgage life insurance from your bank?

You might hear these lies from your bank

  • buying from a broker will hold things up
  • the bank will look more favourably on your mortgage application if you buy cover from them
  • the bank’s policy is cheaper
  • the bank’s insurer is better at paying claims

Blah-de-blah-de-blah.

It’s all BS, but it’s up to you to stand up for yourself and say thanks, but no thanks. At least shop around for another quote, don’t let them bully you into buying their cover without a fight.

All I can say is our quotes will be lower, our service will be better, our turnaround will be faster, and our policy will contain benefits the bank can’t offer – like dual life mortgage protection for the same price as joint.

You’re not obliged to buy from the bank who gives you the loan. And it’s illegal for a bank to offer you a mortgage on the condition you buy insurance from them.

This should be common knowledge. It’s a sad state of affairs when we have to clarify when it should be on the bank to explain this to you before you sign on the dotted line.

Don’t be a mug.

What’s the best mortgage protection policy?

This changes regularly, so we keep this post updated

How to find the best life insurance for your mortgage

What are the different types of mortgage protection insurance?

A must-read before you get bullied by your bank.

Guide to mortgage protection for first-time buyers

A guide to getting mortgage life insurance if buying from abroad.

Non-resident mortgage protection

What you need to know if you have agreed on a split mortgage with your bank.

Mortgage protection for split mortgages

Don’t get sidetracked by price only.

Can I get mortgage protection with a pre-existing condition?

Yes, in the vast majority of cases. Here’s a detailed blog on getting mortgage protection with a chronic illness.

Chronic illness should not affect your chances of getting a mortgage for your dream home.

Pitfalls to avoid if you’re buying with a partner

If you’re not married and buying together, you must read this

Mortgage Protection Cohabiting Couples

Mortgage life cover bells and whistles

Pimp your policy with these add-ons.

The most flexible type of mortgage life insurance available.

Convertible mortgage protection

How to get twice the cover for the same price Dual life mortgage protection

Why you should think carefully before adding serious illness cover to your policy Mortgage protection serious illness cover

The smart alternative to serious illness cover. Mortgage income protection

Applying for and buying mortgage insurance

Where can you get the best mortgage protection quotes?

Why you should avoid your bank like the plague

Will I need to do a medical?

Urgent mortgage protection

How much does mortgage protection cost?

The cost of mortgage protection depends on:

  1. age
  2. smoker status
  3. amount borrowed
  4. term of mortgage
  5. health

Using Sarah and Paul above and presuming they’re non-smokers in good health, here are a range of quotes for €270,000 mortgage protection over 25 years.

  • Age 30: €17.21 per month
  • 35: €23.32 per month
  • 40: €32.54 per month

The older you are, the more expensive it becomes.

If you’re a smoker, you can double those quotes.

By the way, if you vape (even 0% nicotine ones) or use any nicotine replacement products, the insurers will class you as a smoker. Once you are 12 months “clean”, you can apply for non-smoker rates.

Mortgage protection quotes

What is mortgage repayment protection insurance?

Mortgage payment protection insurance is……well, it’s a waste of money.

In theory, it’s a policy that will pay your mortgage for 12 months if you can’t work due to illness or redundancy.

In practice, it was mis-sold to people (like the self-employed) who could never make a valid claim.

Avoid.

What is mortgage income protection?

It’s easy to confuse mortgage income protection and mortgage repayment protection because they sound similar.

But the benefits they provide are like chalk and cheese.

Mortgage income protection will provide you with an income to pay your mortgage if you can’t work due to any illness, injury or disability.

You’ll get paid until you get back to your job or until the end date of your mortgage.

So if you get sick on day one of your 25-year policy and can’t work again, your policy will payout for 25 years.

Mortgage income protection is the younger brother of income protection – you can read more about the different types of income protection here.

Want to know even more?

Check out this article on how to compare mortgage protection policies in Ireland.

Over to you…

That’s the bare bones of mortgage protection.

I’m sure you have millions of other questions. If you do, here’s a good place to start. You can download our mortgage protection guide or sign up for our free mortgage protection course, where you’ll learn all you need to know about mortgage protection and the pitfalls to avoid. And all in easy bite-sized pieces served fresh over email.

If you prefer a chinwag, I’m on 05793 20836.

Or, if you’re ready to go and would like me to make a recommendation, please complete this questionnaire, and I’ll be back over email with a personalised recommendation.

Nick McGowan
lion.ie | making life insurance easier.

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You Don't Need Life Insurance for a Mortgage (You Only Need Mortgage Protection)

If you think you need life insurance for a mortgage, you're mistaken.

All you need is mortgage protection (no matter what the bank tells you)

It'll save you a few quid...

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