Dáil Éireann Debate, Thursday - 27 September 2018
66. Deputy Michael McGrath asked the Minister for Finance if banks have the discretion to grant a mortgage to a person without adequate life assurance and-or mortgage protection cover in place; and if he will make a statement on the matter. [39161/18]
View answerThe Central Bank has advised that when an individual(s) applies for a mortgage loan to buy a home, the individual(s) will generally be required to take out mortgage protection insurance. This is a particular type of life assurance taken out for the term of the mortgage and is designed to pay an amount equal to the outstanding principal amount of the mortgage on the death of the borrower or joint borrower.
In most cases, a lender is legally required under section 126 of the Consumer Credit Act 1995 to make sure that a mortgage applicant has a mortgage protection insurance before granting a mortgage loan. However, there are certain exceptions to this requirement which are:
(a) 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,
(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,
(c) loans to persons who are over 50 years of age at the time the loan is approved,
(d) loans to persons who, at the time the loan is made, have otherwise arranged life assurance, providing for payment of a sum, in the event of death, of not less than the estimated outstanding principal amount of the mortgage.
