Mortgage repayment protection
If you are taking out a mortgage, you might be offered mortgage repayment protection by your lender or broker. These policies are designed to cover your mortgage repayments if you cannot work due to compulsory redundancy, illness or disability.
The differences between mortgage repayment protection and mortage protection
Mortgage repayment protection is not the same as mortgage (life) protection - this is a separate policy designed to pay off your mortgage if you die. You do not have to take out mortgage repayment protection, whereas you must usually, by law, take out mortgage (life) protection insurance when you get a mortgage. You can get more product comparison information in our summary table.
Who is this cover suited to?
Mortgage repayment protection may not be suitable for you if you are self-employed or a temporary/contract worker, so make sure you are eligible to get it in the first place. And decide if you really need the cover - check the full costs first.
Before taking out mortgage repayment protection, you should ask yourself:
- Am I in secure employment? If you are then you may not need this cover.
- Do I have good reason to suspect that I will be made redundant? If the answer is yes and you take out this cover, you may have difficulty making a claim in the event that you are made redundant.
- If I lost my current job, is there another form of paid work I could take? If you took another job, even part-time work, you may not be able to make a claim.
- Do I really need this cover? If you have a mortgage with a partner, take into account both incomes and spending.
- What is the full cost of this insurance over the term of the mortgage? Would I be better off saving this amount? Ideally, you should build up three months salary to cope with unexpected events.
- Am I already in a sick-pay scheme through my job that would pay me some or all of my income if I couldn't work due to illness?
- Am I entitled to accident or illness cover through my job, sports club or other professional association?
- Would I be better off with alternative cover, such as life insurance, income protection, or serious illness cover?
If you decide to take out mortgage repayment protection, make sure you consider the following issues:
- These policies will not cover you if you take voluntary redundancy.
- The total cost of insurance over the term. While the monthly payment might seem low, it can add up over the term of a mortgage. For example, if you took out mortgage repayment insurance to cover monthly repayments of €1,300, it could cost around €61.75 per month, based on a cost of €4.75 for each €100 covered.
- Whether you are eligible for cover before you take out this insurance.
- What do the policy conditions cover and what do they exclude? For example, some policies may not pay out in the first three months after you take out the policy. Also, some policies may not pay the first month's mortgage repayment in any successful claim.
- What benefit would you receive? Many policies only cover 12 months' mortgage repayments. You may decide that these benefits are not worth the cost of the insurance.