Shop Around For Your Mortgage Protection

by | Oct 29, 2021 | Mortgages, Investment Advice

Mortgage Protection Donegal

When you apply for a mortgage, it may be a requirement that you put in place a Mortgage Protection. Here we will explain what mortgage protection is, we will clear up some common myths about this type of cover and offer reasons why you should review your existing cover.

What is Mortgage Protection?

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It is a simple life assurance policy designed to pay off the outstanding amount of the mortgage should you die before clearing the loan. It is compulsory when the mortgage is for a family home, it may not be compulsory if you are buying an investment or holiday home.

The amount of cover reduces each year in line with the decreasing balance on the mortgage.

If the lives insured live to the end of policy term, or if the policy is surrendered, no benefit will be paid. Unless the borrowers want the option of a longer-term policy, the term of the mortgage protection policy should match the term of the mortgage.

But what if you pay your mortgage off early?

You do have the option to continue with this relatively cheap form of life assurance even when the mortgage is repaid.
Should you wish to cancel the policy, you do need to inform the provider

Mortgage Protection issues

Other issues could arise when borrowers seek to switch lenders or borrow an increased amount. If their cover is part of their existing lender’s group scheme, they will have to take out a new policy if they switch lenders.

As premiums are based on the person’s age at the time of applying, this could lead to increased costs. If they have developed a health problem since they took out their first policy, the premiums for the new policy could increase.

Mortgage Protection Donegal


Do I have to buy mortgage protection from my bank?

People are often under the illusion that you must take out mortgage protection with the bank that’s giving you the mortgage. Well, you don’t and by doing so you could be missing out on big savings by not shopping around.

Banks and lenders will usually offer you their own mortgage protection prior to you drawing down your mortgage loan. And while it might seem convenient to go with the same company for both your mortgage and your insurance, by law you’re under no obligation to take out mortgage protection with the same lender or bank that is giving you your mortgage.

Not buying mortgage protection from your lender won’t affect your application in any way and quite often it can be cheaper and quicker to buy your mortgage protection elsewhere.

That’s because banks are tied to a sole life insurer and can offer you just one price for mortgage protection. However, Financial brokers like Advice First will compare prices across multiple insurers to find the best cover for your needs. And when it’s time to buy, our dedicated team can arrange cover for mortgage protection in as little as one hour in some cases.
So, there is no need to worry about any impact or delay using us might have on your mortgage application or drawdown date.

Don’t overpay

Buying your first home or even if you have been on this road before, it can be a very stressful time. There’s lots to consider and quite often people leave arranging mortgage protection until the very last minute.

But by taking the time to shop around and compare the best prices, you could really save over the longer term.

Because your mortgage protection policy has to run for the entire length of your mortgage, you could be paying it for over 30 years. Why overpay on a product that you could be paying for this long?

Saving even just €10 a month by shopping around could see you net an extra €3,600. Not bad for a few minutes’ extra work.

Visit our mortgage centre

Wherever you are in your mortgage journey, we’re here to make it easier. We have assembled everything you’ll need; we can help you find the cheapest interest rates and get you the best mortgage protection quotes.

7 Myths about Mortgage Protection

Mortgage Protection Donegal

It’s easy for Life insurance to appear complicated and confusing, and in the process, myths and false information become commonplace. Mortgage Protection cover is no different, but like most insurance products, it is actually quite straightforward. We want to outline some of the most common myths about Mortgage Protection, so you can make informed decisions and get the best value for your money:

Myth 1: You must take out Mortgage Protection cover with your mortgage lender.

This is not true. People commonly take out Mortgage Protection with their mortgage lender because it’s convenient. When taking out your mortgage, the bank will likely present you with their quote for Mortgage Protection, but you don’t actually need to buy it from them. You can shop around and find the best value option for you.

Myth 2: There is no benefit to taking Mortgage Protection cover with someone other than my mortgage lender.

This is not true. If you shop around, you may find cheaper cover. Another provider may offer other benefits that your mortgage lender does not. At Advice First, we shop around multiple providers for the best price and some providers are currently offering a further discount as well.

Myth 3: You can’t switch Mortgage Protection cover providers

This is not true. You can switch your Mortgage Protection provider if you wish. Just like any insurance product, you can shop around and change providers as you feel necessary.

Myth 4: It’s expensive to switch your Mortgage Protection provider
This will largely depend on your personal circumstances. For instance, prices are based on your age, smoker status, amount of cover and the term required. If you are in good health, you may even save money by shopping around. If you have quit smoking since originally taking out your Mortgage Protection policy, there may be cost savings available to you.

Myth 5: It’s a lot of work to switch Mortgage Protection providers
The most time-consuming part of switching Mortgage Protection provider will often be your research phase and collating all of your information. With Advice First, you can get a quick quote, immediately on the phone, which will give you an indicative steer on your cost.

Myth 6: I don’t need Life Insurance if I have Mortgage Protection
This is not true but is a common misunderstanding. The purpose of Mortgage Protection is to pay off the balance of your outstanding mortgage, should the worst happen.

Life Insurance on the other hand, can provide a lump sum payment, in the event of your untimely death. It’s designed to cover the loss of your income for your family.

Myth 7: If my partner dies, I will receive the total cost of our mortgage
This is not true. Your Mortgage Protection premium reduces in line with your mortgage, so it gets smaller as your mortgage does. You will receive this reduced amount, which will be enough to cover the remainder of your mortgage. You can take a level term contract, where the cover does not reduce over the term.

Any of our advisors will be happy to give you guidance and advice on Mortgage Protection and all of our other types of Life Insurance, simply call us on 074 910 3938

Reasons to review your existing Mortgage Protection policy

Mortgage Protection Donegal
  1. Premium Reductions

Premium rates have reduced – If you have had your mortgage for a number of years there is a chance you are overpaying on your mortgage protection as rates have reduced. If you took out mortgage protection through your lender, we recommend you review as soon as possible as banks are tied agents who do not have the option of shopping the market for the best rate.

  1. Outstanding Mortgage Balance

You may increase Mortgage payments to have you mortgage cleared earlier, or you have been in a position to pay a lump sum off your mortgage resulting in a lower amount owed than that currently covered under your mortgage protection policy.

  1. Smoking Habits or health changes

You may have been a smoker or had a medical issue when your mortgage protection plan was originally taken out which may have resulted in a premium loading. If you have been a non-smoker for more than 12 months, you may now be eligible for non-smokers rates. This may impact greatly on your premium payments.

  1. Special Offers

Some providers are currently offering premium discounts and Advice First can help you avail of premium discounts.

  1. Additional Benefits

Chances are that when your mortgage protection was originally taken out, it was on a reducing basis without any additional benefit. Depending on your current financial circumstances additional benefits might be prudent to be included to ensure you are adequately covered. Additional benefits include:

Specified Serious Illness Cover

Specified Serious illness insurance pays you a tax-free lump sum if you are diagnosed with one of the specific illnesses or disabilities that your policy covers. It is also sometimes called ‘critical illness cover’.

Convertible option

The conversion option enables you to extend the term of the cover without medical underwriting. The conversion option can provide the appropriate cover for you if you ever get into financial difficulty and need to extend the term of your mortgage.

Waiver of premium option

This covers the cost of your mortgage protection premiums in the event of you being unable to work due to illness or injury.

Mortgage Protection Donegal

Before deciding on replacing your current mortgage protection it is vital that you review your overall financial situation with a financial adviser.

Please note that all new applications will be medically underwritten, and terms and conditions will apply

For further information, please do not hesitate to contact Advice First Financial by phone on 074 910 3938 or via email on [email protected]

Warning: The material in this email is not intended to provide advice and is provided for general information purposes only.

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Talk to us now and make an appointment with one of our Letterkenny team of QFAs. We are here to help with your Financial Planning Concerns. Ask us questions on Retirement & Pension, Life Insurance & Protection, Mortgages, and Investment Advice. Get in touch here or give us a call at 074 91 03938.

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