First-time buyers who fail to shop around for mortgage protection could pay almost €10,000 more for cover over the loan’s lifetime than those who seek out the best value, according to price comparison website Bonkers.ie.
Mortgage protection life insurance, which pays off the outstanding balance on your mortgage if you die before the loan has been fully repaid, is a legal requirement in Ireland in most cases.
However, many first-time buyers are unaware of this until late in the process and rush to take out a policy with their loan provider at the last minute – usually at a higher cost, said Daragh Cassidy of Bonkers.ie.
Others mistakenly believe they are obliged to buy mortgage protection from their bank in the first place, which is not the case.
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The research was carried out in September by comparing prices on Bonkers.ie from the country’s five leading life insurers and the main banks.
A 35-year-old couple, who are non-smokers, taking out a €500,000 mortgage over 30 years would require a €500,000 joint or dual mortgage protection policy for the same period.
This would cost €53.47 a month with Bank of Ireland. However, the same cover could be got for €43.18 a month with Zurich or New Ireland, which equates to a saving of just over €10 a month or more than €3,700 over the life of the policy.
If the couple smoked, the policy would cost €103.12 a month with Bank of Ireland and €80.32 a month with Zurich, a difference of almost €23 a month or more than €8,200 over the life of the policy.
And a 40-year-old single non-smoker taking out a €300,000 mortgage over 25 years would pay €32.61 for a mortgage protection policy with PTSB and €27.29 with Bank of Ireland.
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However, the same cover could be got for just €22.26 a month with Zurich and €22.54 with Royal London Ireland, where the first month’s cover is also free.
“For a lot of first-time buyers, getting mortgage protection is the last thing on their mind,” Mr Cassidy said.
“And many simply take it out with their bank thinking it’ll save them time and money. Or that they’re under obligation to do so. But this is absolutely not the case.”
He said mortgage customers were free to shop around and get cover from any insurer they chose. “And in some cases you’ll get cover more quickly by using an online broker. So you can save time and money,” he said.
He said savings of €10 or €20 a month might not sound like a lot, “but over the 20- or 30-year term of your mortgage it adds up to thousands. And it’s the price of a nice glass of wine, a cinema ticket or a music subscription every month for decades.”
