Are you thinking about buying a house or apartment using a mortgage? If so, your lender will require that certain insurance policies to be in place before they issue the loan monies.
1. Insurance
There are two types of insurance that are required to get a mortgage when you buy a house in Ireland. They are as follows:
- Mortgage protection insurance; and
- Buildings insurance
2. What is mortgage protection insurance?
Mortgage protection insurance is a form of life insurance policy that will pay out and clear the balance on your mortgage if you were to die during the term of the mortgage. It must cover the full loan amount and run for the full mortgage term. So, if you take out a mortgage over 25 years, your mortgage protection insurance must also be in place for 25 years.
There are limited instances where the bank will give you a mortgage without a mortgage protection policy. Some of these include if you are over 50 years old or if you cannot get this insurance, for example due to a current serious illness, health issue or dangerous occupation.
3. What is buildings insurance?
Buildings insurance is a type of home insurance that insures the building itself and pays out if the building is damaged. It covers the cost to repair or rebuild your home. The bank will want its interest noted on the policy and this is typically one of their requirements before they will issue the loan monies.
In our experience, this often causes delays as the banks are quite particular around how their interest is noted and we would advise that the form of policy be sent to the bank for sign off as early as possible in the process.
If you are buying an apartment, the management company will have a buildings insurance policy in place for the development which will include the apartment you are buying. In this instance, the bank will require that their interest be noted on this policy rather than you having to take out your own building insurance policy.
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