Following a review of the two existing local authority home loan schemes, the House Purchase Loan and the Home Choice Loan, a new loan offering, known as the Rebuilding Ireland Home Loan (RIHL), was introduced on 1 February 2018.
Following the initial roll-out of the scheme, my Department has engaged with the Housing Agency and the Housing Finance Agency to consider the experience to date. As a result of this engagement, the online calculator on www.rebuildingirelandhomeloan.ie has recently been updated to include the cost of mortgage protection insurance (MPI), when calculating the total loan amount that an applicant may be eligible to borrow under the scheme. As noted on the website, this calculator gives indicative results for illustrative and guidance purposes only and is not an offer of a loan.
In relation to the cost of coverage under the Local Authority Mortgage Protection Insurance scheme, it is a statutory requirement that MPI is taken out in respect of all local authority housing loans. This scheme is overseen by the Mortgage Protection Insurance Committee, and has applied to all house purchase loans approved by local authorities after 1 July 1986.
One of the conditions of the scheme, which is a group policy, is that it is obligatory for all borrowers who meet the eligibility criteria to join the scheme. Altering this condition would have a negative impact on the scheme and increase the cost for all existing borrowers.
The local authority MPI is designed to provide an appropriate level of insurance cover to those who wish to avail of the Rebuilding Ireland Home Loan. It offers a number of additional features over and above the standard MPI products available on the market. Standard MPI products are individually priced, based on a member’s age, amongst other factors, whereas the local authority MPI scheme is a group arrangement, offering a single group rate per €1,000 sum assured to all participants in the scheme.
The scheme also provides other benefits over standard MPI products. These include the payment of mortgage repayments if there is a valid claim as a result of disability; an additional payment of €3,000 in the event of a member’s death, separate to life cover; and members are also covered for death up to age 75 rather than 65 as is the case under standard MPI cover.