Mortgage protection when switching

D

delta_bravo

Registered User
Messages
41
Hi,

Have an existing mortgage with ptsb. Our mortgage protection is with Irish life through the bank. At the time of drawdown we had to go with them for insurance as a few medical issues made it very hard to get a broker quote but the bank policy were willing to take us on. I was looking around at switching and have already heard from a broker I might struggle to get mortgage protection from them. So im wondering if anyone knows the following :

1. Is it possible to convert existing bank tied mortgage protection into one we can take to another bank. I'm guessing no.

2. When switching mortgage, do the receiving bank try sell you their own mortgage protection or do they generally expect you to have it arranged?

Thanks
 
You can re-assign the MPP to the new lender, yes, in theory.

BUT, there is the issue of timing.

You have to have MPP every day.

So you would have to arrange to re-assign MPP on the exact same day the old mortgage is repaid.

What if the new mortgage starts a few days before the old mortgage is repaid?

Messy.

In my case, I started a new MPP for the new mortgage, the premium was lower than the old MPP, due to shorter term.

Later, I intend to cancel the old MPP.
 
The new bank, and/or the new mortgage broker, may well try to sell MPP, yes.
 
It depends. Standalone mortgage protection policies can be transferred to different banks and different mortgages. The new bank will accept them as long as the term and cover are sufficient for the new plan. However, there are "block cover" plans through banks that cannot be transferred to other lenders and are specific to that bank. You need to check out which one you have. Phone customer services and ask, they will tell you quick enough.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
But does this (reassigning the MPP on a very specific day) really happen in practice? Surely many people who switch mortgage lender will draw down the new mortgage a few days before the old mortgage is paid off?
 
In my experience it depends on the lender. Generally speaking though they require you to have a policy assigned to them, as a condition of drawdown. As your existing lender won't release their interest in your policy until the mortgage is cleared, this usually leaves two options:
  1. The new lender accepts an undertaking that you will transfer the existing policy, once the existing mortgage has been cleared with the old lender (assuming there is sufficient coverage on it, both in terms of €€ and time)
  2. You have to take out a new policy for the new mortgage, and cancel the old one, once the old mortgage has been cleared
Consumers shouldn't be forced to take out new policies when changing lenders, it's a barrier to change. This becomes an even bigger issue if people have developed medical conditions since they've first secured mortgage protection, they may not be in a position to get a new policy.
 
What is a 'block cover'?


Agree with this and wish I had known it early to ensure I had a kind that could move.
 
HonestlyTho said:
What is a 'block cover'?



Agree with this and wish I had known it early to ensure I had a kind that could move.
Click to expand...

Some lenders had arrangements with some life insurance companies that, in return for getting all the lender's Mortgage Protection business, the life insurance company would issue cover with a streamlined application process and/or cheaper premiums than normal. Cover was arranged as a "block" rather than as individual policies. Downside was that if you move away from the lender, your cover would cease.

Individual Mortgage Protection life insurance policies are far more common and are not tied to any lender.
 
Dave Vanian said:
...Individual Mortgage Protection life insurance policies are far more common and are not tied to any lender.
Click to expand...
While not tied/setup by them, most lenders make it a condition of drawdown that their interest is registered on your individual policy.
 
mojoask said:
While not tied/setup by them, most lenders make it a condition of drawdown that their interest is registered on your individual policy.
Click to expand...

A lender's interest is not and cannot be registered on the policy itself; a separate Deed of Assignment is drawn up. Same basic effect but because it's not on the policy, the policy can be reassigned to another lender easily enough. Or it can be reassigned to yourself so that it operates as an unencumbered life insurance policy.
 
Am switching through Avant and they've a great team who made it really easy for me to find alternative coverage, which is better because it can move with me as I switch over the lifetime of the mortgage, and it works out cheaper.

Just waiting to switch mortgage now, and then will do the rest.
 
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