Thomas Gould
Question:149. Deputy Thomas Gould asked the Minister for Housing, Local Government and Heritage his views on whether there is only mortgage protection insurance offered to local authority home loan applicants. [21479/22]
View answerThursday, 5 May 2022
Questions (149)
Written answers
The Local Authority Home Loan is a Government backed mortgage for those on modest or low incomes who cannot get sufficient funding from commercial banks to purchase or build a home. It has been available nationwide from local authorities since 4 January 2022. The loan can be used both for new and second-hand properties, or to self-build. It is the successor to the Rebuilding Ireland Home Loan.
The local authority mortgage protection insurance (MPI) scheme has applied to all house purchase loans approved by local authorities after 1 July 1986, including the Local Authority Home Loan.
One of the conditions of the MPI scheme, which is a group policy, is that it is obligatory for all local authority borrowers who meet the eligibility criteria to join, and remain in, the scheme. A local authority housing loan applicant, who is not eligible for the local authority MPI scheme, must source a suitable comparable individual MPI policy from the market.
It is important to note that there are a number of differences between the local authority MPI scheme and standard MPI products available on the market. Most notably, the current local authority MPI covers mortgage repayments in case of borrower disability, which is not part of standard MPI. In addition, the local authority MPI scheme offers a single group rate per €1,000 sum assured to all participants in the scheme as opposed to standard MPI products that are individually priced based on a member’s age, amongst other factors.
In summary, the local authority scheme provides benefits not typically available under standard MPI products;
- Mortgage repayments are paid if there is a valid claim as a result of disability;
- Separate to life cover, an additional €3,000 is payable in the event of a member’s death
- Members are covered for death up to age 75, where as standard MPI cover usually ceases at the age of 65.
The scheme is subject to periodic review and competitive tendering in accordance with the terms of EU Directives relating to the award of public service contracts. This is to ensure that the most appropriate cover at the best value for money is secured for local authority borrowers over the entire life of their mortgages.
The most recent public procurement competition for the provision and administration of this MPI scheme was conducted by the Local Government Management Agency. The contract resulting from this open tender competition came into effect from 1 January 2022 and is due to expire on 31 December 2022. My Department will review the provision and administration of the MPI scheme prior to that date.