Sarah came to me in a bit of a tizzy, she had a lot of queries that you may have too as a self-builder:
We are doing a self build so when applying for mortgage protection as we don’t know yet what the final figure we will draw down for our mortgage what do we enter for cover amount? For example, we have applied for a mortgage of 280k but say we only draw down 260k, in the end, can our cover be amended then and our premium decreased to reflect this or do we have to just go with the full amount of 280k we applied for the mortgage?
Let’s pick the bones out of that.
You’ll need to cover the amount and term on your loan offer, so if this states €280k over 35 years, you need mortgage protection cover of €280k over 35 years.
If eventually, you only draw down €260k of the mortgage, you can, with the bank’s permission, and depending on the insurer you go with, reduce the amount of cover to €260k to reduce your premium.
Also, if we apply for the mortgage protection now, but we don’t take our first drawdown for a few months – at what point do we start paying the mortgage protection policy payments? Would they need to start now, or could we apply now and not start to pay them until the first drawdown?
You won’t pay a penny until you tell the insurer to start your policy (and even then, some insurers will offer you a month’s free cover!).
You can apply now, have your application underwritten and hold it for the start date.
It’ll be one less thing to worry about.
For more detail, take a look at this blog we wrote on when to start your mortgage protection policy.
We are going with a 2 yr fixed rate self-build mortgage initially. It’s possible that we would then move our mortgage to another bank, depending on interest rates at that time. Can you confirm, would it be possible to keep the same mortgage protection policy , and take it with us to the new bank? Or what’s the process?
If you take a policy out through a broker, you can transfer that policy to a new lender in the future, assuming the cover and term on the new mortgage is the same or less than the existing mortgage.
Be careful if you are considering taking out a policy through your lender.
Beware of buying a BLOCK policy.
The bank will cancel the policy if you switch banks in the future forcing you to reapply.
If you have had some health issues and can’t get a new policy, you will ve stuck with your existing lender.
Myself and my partner both need mortgage protection cover. We have a self build mortgage. I’m not sure if it is best to have us both on the one policy?
As a rule, we recommend two single “life of another” policies for cohabiting or unmarried couples getting a mortgage together.
This will reduce but not eliminate any potential inheritance tax should one of you pass within the first three years of getting the mortgage.
Your mortgage protection policy will clear the mortgage, but Revenue will levy tax on half the house that you will inherit.
Ridiculously unfair, I know butsurelookit, it’s tax; who said it was supposed to be fair?
If you’re not married and are getting a joint mortgage, I recommend you head over here and read this blog on mortgage protection for unmarried couples.
Alternatively, you could always, ya know, get hitched:
You’ll pay the same premium for a self-build as someone buying off plans or buying a second-hand house.
When it comes to mortgage protection, the type of mortgage is irrelevant, the insurers are only interested in assessing the risk of you making a claim, so they will base your premium on
Click here for an instant mortgage protection quote. We don’t ask for contact details, so we won’t hound you – if you’re interested, you contact us, and we can get the ball rolling.
Who wants to be dealing with cold callers these days?
We STRONGLY recommend income protection that will give you a replacement income to pay the mortgage if you can’t work long term due to ANY illness or accident.
Serious illness cover is also available if you’re worried about the big C.
Finally, if you are going to fill all those rooms with teeny tiny feet, you’ll want to look at life insurance.
Here’s a good place to start
Everything New Parents Need to Know About Protecting Their Little Ones
If you haven’t a clue where to start and would like some bespoke (fancy wha!) advice, please complete this questionnaire, and I’ll be back with a recommendation based on your circumstances.
Right, that’s enough auld guff from me.
I’ll leave it there. If you have any questions on self-build mortgage protection that I haven’t answered, feel free to give me a shout on 05793 20836 or schedule a callback here.
Thanks for reading
Nick
Editor’s Note | We published this blog in 2021 and have updated it since.
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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