You’re not over the moon that your parents must offer
themselves as guarantors for your mortgage
but your lender has insisted – so you grudgingly agree.
There’s no way you’ll get the mortgage otherwise.
But you don’t want to force the added expense of
life insurance on your parents at their age.
But the bank, again, are insisting they
take out life insurance as guarantor.
You’re stuck between a rock and a hard place.
Your parents will struggle to pay the exorbitant
price they’re being quoted for life insurance as
guarantor. But you won’t get a mortgage
without a guarantor.
What can you do?
Like this:
Consumer Credit Act, 1995 (155-page PDF)
126.—(1) Subject to the provisions of this section, a mortgage lender shall arrange, through an insurer or an insurance intermediary, a life assurance policy providing, in the event of the death of a borrower before a housing loan made by the mortgage lender has been repaid, for payment of a sum equal to the amount of the principal estimated by the mortgage lender to be outstanding in the year in which the death occurs on the basis that payments have been made by the borrower in accordance with the mortgage, such sum to be employed in repayment of the principal.
the lender can insist on borrowers taking out a mortgage protection policy
(2) Subsection (1) shall apply as respects all housing loans except—
(a) where the house in respect of which the loan is made is, in the mortgage lender’s opinion, not intended for use as the principal residence of the borrower or of his dependants,
mortgage protection not required for rental properties.
(b) loans to persons who belong to a class of persons which would not be acceptable to an insurer, or which would only be acceptable to an insurer at a premium significantly higher than that payable by borrowers generally,
mortgage protection not required if the cost of cover is excessive
(c) loans to persons who are over 50 years of age at the time the loan is approved
mortgage protection not required if borrower is over 50
Arm yourself with the Consumer Credit Act as above, but remember,
the final decision rests with your mortgage lender.
In our experience, they will waive the requirement
for life insurance as guarantor if your parents are happy to
sign a waiver. This will state that your parents aware of the consequences
of not having sufficient mortgage protection insurance and are happy to
proceed regardless.
If you’d like me to make a recommendation on the types of cover you should consider based on where you are in life, please complete this questionnaire and I’ll be right back.
Nick McGowan LION Life Insurance as Guarantor
As Ireland's leading life insurance broker, we specialise in comparing the rates and policies from the top five Irish life insurance providers and offering the very best value quotes to suit the individual needs of our clients. Our expertise lies in finding a suitable insurance plan for those with specific needs, be it a particular illness, occupation or claim history, we've got you covered in every sense!
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