Mortgage Protection

Information

When you get a mortgage from a bank or building society, there is often a requirement that you take out a mortgage protection policy to ensure that the mortgage is fully repaid even if you die. This is simply a special type of life assurance taken out for the term of the mortgage and designed to pay it off on the death of the owner or joint owner.

If you are under 50 years of age, your lender must make sure you have life insurance to pay off your home loan if you die. The main reason for this is to make sure your family home would not have to be sold to pay off the mortgage.

You do not have to take out this insurance if you are over 50 or if your mortgage is on an investment property, however, some lenders may insist on it as a condition of getting the mortgage.

It is very important to review your mortgage protection policy on a five-year basis and ensure that additional cover is taken out, if necessary, to cover extensions of the term of the mortgage, penalties incurred, etc. Premiums must be kept up to date - if you go into arrears, the policy may lapse. Mortgage protection should be payable on a joint life, first death basis. This means that the mortgage will be repaid on the death of the first partner (if a couple is involved).

For extra payment, you can take out critical illness cover, which pays up if one owner is rendered incapacitated. It is important to get good advice on mortgage protection before you act.

Mortgage Interest Supplement

The financial pressures that often occur on the death of the main breadwinner or homemaker may make it difficult to continue paying your mortgage. If you don't have adequate mortgage protection and you pass a means test, you may be eligible for a Mortgage Interest Supplement from your local Health Services Executive (HSE) Area.

Mortgage Interest Tax Relief

Mortgage interest tax relief is granted at the standard rate of tax and was granted directly by the mortgage institution from January 2002, this is known as Tax Relief at Source (TRS).

If you are making mortgage repayments and not receiving TRS you should contact the Collector General at Lo Call 1890 463626 and they will arrange for the relief to come into effect.

Interest relief is still available for non-secured loans used for the purposes of home improvement, for more information contact PAYE Lo Call 1890 605090.