Life Life and home insurance

E

empor2010

Registered User
Messages
16
Hi all
just wondering if anybody has any advise on this,
i have a mortgage of 170k which i borrowed to build a house which i moved into a few weeks back. i was insured for the last 2 years under (building under construction insurance) and went to switch 2 weeks ago to normal household insurance. the bank insists the the property be insured for 288k and that my life cover be the same 288k. just wondering if this is correct.... any help thanks
 
The house needs to be insured for the rebuild cost - this will be on the valuation.

You just need basic mortgage protection for the same amount and term (years) as on the mortgage. You are not required to have life insurance.

Shop around for both as you will do better than the bank will offer. Charlie Weston did a piece in the Independent that may be worth reading.
 
hi norfbank thanks for the reply
i build my own house going the self build option rather than a builder so no valuation needed (i think) and althought i borrowed 170k i built for around 150k so i presume they are going on building rates??????????
you say im not require life insurance but what would happen the property in the event of my death to the property
thanks again
 
You're welcome.

When you are switching, the lender will require an independent valuation to be carried out to verify what the house is worth - whether it is self built or not. On this valuation will be the rebuild cost - this is what the house needs to be insured for to keep the bank happy.

Mortgage protection is a type of life insurance - it can be confusing so bear with me. Mortgage protection will clear the outstanding mortgage amount on death, the amount insured will reduce as you pay off your mortgage. This will be assigned to the bank meaning they will get the proceeds of it in the event of your death.

Life insurance on the other hand will have a level or constant sum assured, it will always be €x no matter what.

All you need to satisfy the lender is the basic mortgage protection policy but if you have dependents you should look into putting in place a separate personal life insurance policy.

Hope this makes sense.
 
Thanks again norfbank so do you suggest that i get the house valued for insurance purposes?? i dont think i have a valuation done before so i dont know where the figure 288k came from.
i've put in place the life insurance and home insurance because the bank would not iissue the final payment until these were in place for the said amount 288k
thanks again most helpful
 
The mortgage protection cover is only required to be the amount of the balance left on the loan. Therefore the cover required on this aspect only needs to be the €170,000 you borrowed not the rebuild cost of the house. If the bank was looking for you to take out €288,000 when the loan amount is only €170,000 then they are looking to over insure you (and in essence over charge you unless there is a good reason why they want €288,000 mortgage protection cover).

In relation to the house insurance, they can insist on the rebuild value by a builder not a self build cost.



www.CheaperLifeAssurance.ie
 
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