Dáil Éireann Debate, Tuesday - 25 February 2014
209. Deputy Michael McGrath asked the Minister for Finance if there is any legal requirement for lenders who are regulated entities to ensure that at the point a residential mortgage is drawn down and also during the life of the mortgage, the borrower must have either a life assurance policy or a mortgage protection policy in place to cover the balance of the mortgage at a minimum; and if he will make a statement on the matter. [9393/14]
View answerSection 126 of the Consumer Credit Act 1995 requires that, subject to certain exemptions set out in the Act, "a mortgage lender shall arrange 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".
One of the exemptions is where the borrower has otherwise arranged cover. In the case of mortgages in arrears, under Provision 42 of the Code of Conduct on Mortgage Arrears, where an alternative repayment arrangement is offered by a lender, the lender must provide the borrower with a written explanation of how the alternative repayment arrangement works including a statement that the alternative repayment arrangement may impact on the borrower's mortgage protection cover.
In addition, the terms and conditions of the relevant mortgage contract(s) may set out any obligations of a borrower in this regard.
