Mortgage process blocked until we get a Home Insurance policy with Full cover, including Flood cover.

S

Springers

Registered User
Messages
42
Hi,

We went sale agreed on a property located in a flood risk area.

We had AIP and even Loan Offer but recently been advised by PTSB that Mortgage process is blocked until we get a Home Insurance policy with Full cover, including Flood cover.

We tried online quote with a couple of main insurance companies (Allianz - Arachas - Aviva - Axa etc) but as soon as we enter the Eircode, we got the message "doesn't cover flood". I believe they all use the same engine that checks the Eircode from floodinfo website.

Has anyone faced the same issue and would recommend a particular insurance company and/or broker? It took us 3 years to finally get the house and frustrating that we are blocked at the final step.

Update: Springers switched to AIB who gave them a mortgage without requiring flood insurance. Brendan
 
Last edited by a moderator:
Have you tried Zurich? I got cover in an area with a flood going back to 2000/2001 with them when other companies would not quote.
 
Thanks @Luternau for the prompt response.
Yes, I did and got this message "Our records show that your property is in an area at risk of flooding, please note any quotation we may be able to offer will exclude cover for flood." as soon as the Eircode is entered. I believe back in 2000, they didn't have these GEO engines that they use for online quotations.
 
Like this for example
www.dolmen-insurance.ie

Non Standard Home Insurance - Dolmen Insurance Brokers

Non-Standard Home Insurance Cover for Hard-to-Insure Homes Finding it difficult to get home insurance? You’re not alone. Many homeowners struggle to secure cover when their property is considered non-standard. That’s where Dolmen Insurance comes in. We specialise in helping people protect homes...
www.dolmen-insurance.ie www.dolmen-insurance.ie
 
@Brendan Burgess The property is in Cork city centre.

  • This was our main criteria for our forever home for many reasons: kid's school, hospital, groceries within walking distance, non-car dependency (therefore higher disposable income), No commute needed (meaning more time with family) => these are the pros
  • Cons: smaller property and flood risk
Many portions of Cork city centre are in flood zones. In addition to that, the housing crisis doesn't help and the supply is limited, finding a property in Cork city centre outside of a flood zone is tricky with the current housing market.

In our eyes, the benefits are greater than the drawbacks.
 
Well the benefits are everyday but the flood risk is a “might never happen” thing.

If you could get the mortgage without flood insurance would you be happy to proceed.

How much of that disposable income would be put aside for a flood?
 
@faketales Yes, the flood cover is only because PTSB requires it to drawdown the money. I would have gone without it if it was not PTSB condition. I was thinking about trying with other banks that will not require this condition. I spoke with two neighbours that got a property in the same area, they said their bank (AIB for both of them) didn't require flood cover three years ago.

About the disposable income, my goal is to pay off the mortgage quickly (I already own an appartment) and put aside as much income as I can (as a safety net and/or early retirement), so roughly €2000 a month. It will take approximately three years to pay off the mortgage if I don't lose my job.
 
You are taking a good pros and cons approach to living in the City Centre.
I like your reasoning, but are there not places outside the flood zone where you could get most of those benefits?
If you do get insurance, it will be expensive.
But not only will it be expensive, you will be tied to that company and they can jack up the premium because you can't shop around.

And you will always be on edge during high tides and heavy rains.
 
Springers said:
(I already own an appartment) and put aside as much income as I can (as a safety net and/or early retirement), so roughly €2000 a month.
Click to expand...

So is that not the solution?

Sell the apartment and buy your house mortgage free.
Take out ordinary insurance without the flood cover.
Build up a fund outside your pension to be able to pay for the damage if you do get flooded.

Springers said:
Cons: smaller property and flood risk
Click to expand...

If you sell the property, can you buy a bigger property?

Brendan
 
Brendan Burgess said:
but are there not places outside the flood zone where you could get most of those benefits?
Click to expand...
Yes, potentially. I think we are just being too impatient. There are areas in city centre outside of the flood zone. The problem is the limited supply, it's not a matter of if but when a house is for sale, next year? in 2 years time? next decade? I think the uncertainty causes us to rush into things.

Brendan Burgess said:
If you do get insurance, it will be expensive.
But not only will it be expensive, you will be tied to that company and they can jack up the premium because you can't shop around.
Click to expand...
The flood cover is only for the bank to drawdown the mortgage funds, the mortgage process is blocked because of this condition. I was planning to shop around next year and take one ordinary insurance without flood cover.

Brendan Burgess said:
And you will always be on edge during high tides and heavy rains.
Click to expand...
=> Yes, that is my main concern now, hence the importance of building our own fund.

Brendan Burgess said:
Sell the apartment and buy your house mortgage free.
Click to expand...
=> apartment value is around €200,000 (2 bed) whereas house is €350,000 (3 bed). We still need a mortgage of at least €100,000. Additionally, from our experience, sellers usually refuse buyers in a chain (that was the case for the current one).
That being said, we are saving around €25k a year. We are mortgage free with a property of €200k, €40k of savings and a saving rate of €25k per year. If we don't lose our jobs (we work in IT so probability is not low), we can get €350k in 5 years time and become almost cash buyers. Now I have to convince Ms Springers about this path :), patience is not our strong suit.

Brendan Burgess said:
If you sell the property, can you buy a bigger property?
Click to expand...
=> Yes, sorry, when I said "smaller property" I meant "smaller property" than one that would be located outside of city centre. We went sale agreed on the house we wanted, we were trading up.

Not sure if I am allowed to post a reddit link but I found a thread about a similar situation. According to this thread, only RSA and An Post offer flood cover in flood risk areas, I'll give it a try.
 
Springers said:
The flood cover is only for the bank to drawdown the mortgage funds, the mortgage process is blocked because of this condition. I was planning to shop around next year and take one ordinary insurance without flood cover.
Click to expand...

That strikes me as acting in bad faith. ptsb don't want flood cover for the craic or for just one year. They want it for the duration of the mortgage.

If they were making an unreasonable demand your approach might be justified, but their demand seems reasonable to me.
 
Springers said:
I spoke with two neighbours that got a property in the same area, they said their bank (AIB for both of them) didn't require flood cover three years ago.
Click to expand...

This seems a simpler approach. Get a loan from a lender who does not care about flood insurance.

Start the process now. Talk to a mortgage broker - don't go direct. The broker can check for you in advance if it's a requirement.
 
I am going to second @Brendan Burgess re selling the apartment. Can it not be sold before you go looking for a trade up, or have you already sold or gone sale agreed on your current house? Is it really worth carrying the risk of a rental and potential for uninsured flood at your new home and potential loss of IT job?

Selling the rental would add a lot of financial security. Ok, you may not be saving 25k a year, then but you won't have to deal with tenants anymore.

Are you aware of the changes to rental legislation in March, and potential further changes that may restrict your ability to evict to sell with vacant possession in the short or even long term? There are discussions on this here.

The other solution is another bank, but the flood risk, however low, will still remain. Even with insurance, these are not pleasant events.
 
Last edited:
@Luternau Sorry English is not my mother tongue and my situation was not clear. We own and currently occupy the apartment, hence the saving of 25k a year (mortgage free).

Luternau said:
The other solution is another bank, but the flood risk, however low, will still remain. Even with insurance, these are not pleasant events.
Click to expand...
Indeed, this is my main concern, now I think we might skip this current house and wait for another one that is not in a flood area in Cork city centre. I reckon that we might wait for years, criterias are: 3 bed house, located in Cork city centre, outside of flood area, price < €380k
 
@Springers
I thought the appartment was rented. That was a miss read on my behalf.

Before making a final decision you should
-seek alternative loan offers from Banks
-engage a broker on the insurance cover for flood
-reaserch with potential new neighbours who they are insured with and if it covers flooding and ask about recent flood history in the location

The area I referred to earlier is on a flood plain, but the houses have flooded just once (in 2001). Since then there was substantial flood relief measures and they are working. Even with all this, some insurance companies still have a flood mark on the location and won't insure.
 
@Luternau Thanks, I will explore all the options:

Luternau said:
-seek alternative loan offers from Banks
Click to expand...
=> will start applications now with other main lenders

Luternau said:
-engage a broker on the insurance cover for flood
Click to expand...
=> already done it with two. Both of them were not confident I can get it, still waiting on the underwriter's responses, should get a response next week

Luternau said:
-reaserch with potential new neighbours who they are insured with and if it covers flooding and ask about recent flood history in the location
Click to expand...
=> I will ask the Estate Agent if they had similar sold properties and if same condition (flood cover) was asked by the bank, especially PTSB

Luternau said:
The area I referred to earlier is on a flood plain, but the houses have flooded just once (in 2001). Since then there was substantial flood relief measures and they are working.
Click to expand...
=> same here in Cork city centre: https://www.floodinfo.ie/frs/en/lower-lee/home

Thanks for your input :)
 
You must log in or register to reply here.
Back
Top