Declined Mortgage Protection Insurance – Discriminating Banks will not offer you a mortgage as you have (or had) a health condition.
There is a very urgent matter of banks and lenders discriminating and denying mortgage applicants the right to own their own home due to illness, disabilities and previous health conditions.
So what is going on you may ask?
In Ireland to obtain a mortgage you had to satisfy the bank/ lender on a number of criteria.
1. Your income should be secure.
2. You can provide evidence of affordability from recent rent and savings patterns that you can afford repayments
3. You have an adequate cash deposit.
4. You have a good credit history, well managed finances and typically no loans or credit card debt.
5. You are required to take out home insurance.
6. You are required to take out Mortgage Protection (Life Insurance) to cover the loan. This cover is assigned to the lender. So in the event of the mortgage holder(s) death, the benefit is paid to the lender. This cover will clear the loan.
I have highlighted the last criteria, as this is where the severe problem lies.
In most cases, the lender is legally required under Section 126 of the Consumer Credit Act 1995 to make sure that you have mortgage protection insurance before giving you a mortgage, with some exceptions listed below.
You do not have to take out mortgage protection insurance if:
1. You are aged over 50 or
2. The mortgage is not on your principal private residence (your home) or
3. You already have enough life insurance to pay off the home loan if you die or
4. You cannot get the insurance, or can only get it at a much higher premium than normal.
However, virtually all lenders insist that you take out mortgage protection insurance as a condition of giving you a mortgage, even if there is no legal requirement in your case.
What if you can’t get Mortgage Protection as you have health issues currently or in the past?
Banks and lenders typically insist on mortgage protection and if you cannot get mortgage protection, a bank or lenders will refuse to give you a mortgage. On some occasions, lenders will agree to a “waiver” where an applicant can show he/she has been declined cover by 3 Life Insurance Companies. The bad news is that this is entirely at the discretion of the mortgage provider.
As one of Irelands leading Protection Brokers, we have applicants contact that us on a daily basis, who are desperate to get mortgage protection, as they have been refused cover by their bank insurer, and their dream of buying their new home is vanishing before their very eyes.
This problem has become ever more evident since Covid arrived. Naturally insurers’ across the globe have become stricter to those who they can offer Life Insurance to. They have completely pulled back the risk they are willing to take. This has led to a huge increase in people who can’t get the cover that bank are insisting on, and therefore can’t drawdown on a mortgage for a family home.
Let me give you some recent examples where families have ticked all the above mortgage criteria in that they have a secure income, saved very hard for a deposit, and have a good credit history, but have not been offer a mortgage due to their health.
I have heard from a man from Cork who successful got his life turned around after attempting suicide 4 years ago. He is off all medication, working fulltime. He had paid a €40,000 deposit and the bank refused his mortgage because he attempted suicide 4 years ago. This man lost his life savings of €40,000 and the dream of owning his own home.
I also recently heard from a mother from Drogheda, who had breast cancer and successfully finished her treatment over 2 years ago, and thankfully has been given the all clear since. The bank would not offer her or her husband a mortgage, she can’t get Mortgage Protection therefore the bank will not allow them buy their own home.
Examples like this are heart breaking for families. The prejudice shown of banks is leaving people like in a state of worry, and the whole process is very anxiety-inducing.
Owning your home is more than just having a roof over your head. It is a security, an asset, a place to call your own. It’s a fundamental right!
Our banks and lenders are been allow to discriminate against those, through no fault of their own, who have illness, medical conditions or injuries past or present.
I cannot think of another country in the world where Banks/Lenders insist on having Mortgage Protection no matter what to obtain a mortgage.
Did you know that mortgage protection isn’t compulsory in the UK? So why are we so quick to protect the banks in Ireland?
I have spoken for leading protection advisors in the UK and they find this incomprehensible that our banks can impose this on people. It was mentioned that if this was happening in the UK, there would be such condemnation that this issue would escalate right to the top and would be dealt with at Government level and that is what is needed here too.
It is no surprise that our housing crisis showing no signs of abating; the real ramifications of delayed home ownership and a full feeling of independence may not be visible for a long time to come, unless something is done about this.
I am pleading our Government, media and industry to do all that you can to help those who are been so wrongly discriminated against.
I would like to see the banking industry do the honest and noble thing here and loosen up their criteria for granting a waiver to those who can’t get cover.
Until that matter is addressed our friends, family and clients are going to have to suffer on and not have a place that they can call their own.