The importance of mortgage protection assurance
Having mortgage protection assurance in place is a basic requirement when arranging a mortgage on your family home. All lenders insist that you have adequate cover in place before they will release the mortgage funds. Your policy must have a sum assured and term that match the mortgage amount and term.
The level of cover reduces over time, broadly in line with the reduction in your mortgage debt. In the unfortunate event that you die during your mortgage term, the mortgage protection benefit will be paid out directly to the lender and your home will become debt free for your family.
When’s the right time to start my mortgage protection plan?
People mistakenly take the view that they have no liability until they draw down the funds for their mortgage. However, when you sign the contract to purchase your new home, you are committing to completing that transaction.
Mortgages are offered based on an applicant’s financial ability to repay the debt. If you or your partner should die before you draw down the mortgage, the likelihood is that the lender will withdraw their approval, due to the loss of one income and the potential inability of the surviving partner to service the debt.
However, you still have signed contracts in place and the surviving partner is still legally obliged to complete the purchase. Having your mortgage protection policy in place, at the time of signing the contracts, would ensure that should such an unfortunate event happen, the property can still be purchased, and the surviving partner is comforted by having a family home, free from debt.
MoneyCoach is the financial planning division of Irish Mortgage Corporation, which is one of Ireland’s leading mortgage brokers. Irish Mortgage Corporation has agencies with every lender currently offering mortgages in the country. MoneyCoach provides advice on all aspects of financial planning, including advice on the most appropriate mortgage protection plan for your needs