Under what circumstances can one be refused Mortgage Protection??

T

Tonash

Registered User
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Hi there,

My brother has put down a booking deposit on a second hand house and is waiting to sign contracts. The people he is buying off need a quick sale. My brother is a FTB and has all funds in place for the deposit, and has also recieved his loan offer from the bank. He is now waiting for his Mortgage Protection. Thing is, he has a kidney disease/condition which is not life threatening but is a life long condition....the insurance company have sent his GP a form to fill in (which the GP has done) and they've also sent one to his consultant in the hospital. The ins comp say this is all they are waiting for.

His solicitor has told him that he can sign contracts at the end of the week and pay his 10% deposit, however his broker has said that he is not to sign until he has been approved for his mort protection. Broker says that he may be refused cover because of his condition.

Can anyone tell me where he stands with this??? If he is not approved can he try elsewhere for cover?? Should he sign with the solicitor or wait?? If he waits he may very well lose the house........Is there a chance he would not be able to get cover anywhere???

Thanks for any advise in advance.
 
Tonash,

He'll probably not be refused but will have to pay a higher premium. If he gets refused he has to disclose it to any other insurance company, so if he does get refused, others might refuse him, too. Here is some info that was posted by Sarah W before on a similar thread:

There IS a general register that insurance companies refer to to see if proposers have been rated or declined by other companies.

It is possible to waive life cover under the Consumer Credit Act if you are declined or heavily rated for life cover HOWEVER the lender may withdraw the mortgage offer if they feel it is too risky to lend without cover being in place.
 
It would be unlikely for him to be refused cover outright but he may be accepted on special terms (i.e. with a higher premium). There is provision under the Consumer Credit Act for borrowers to waive cover if they are declined or the premium is unacceptably high however the lender may withdraw the mortgage offer if life cover. Does he have any existing life cover or death in service benefit through his work? Does he have any dependents? Who is the mortgage with?

Sarah

www.rea.ie
 
Thanks Petal & Sarah, appreciate your comments.

Loan is with IIB as far as I know, Single, No dependents and no life cover of any sort.......unfortunately.........

Will the insurance company (Irish Life) accept his GPs letter? as he is finding it extremely difficult to get anywhere with his hospital consultant as hes on hols.......a member of the consultants team told my brother this afternoon that its not the norm for them to deal with this, that its normally the GP?
 
Yes - it is normally the GP. I was in a similar situation in the past. Was told by the mortgage broker to accept a loaded premium - then to cancel the policy after the first month when the mortgage had been drawn down at which stage I would have no mortgage protection at all. The broker's attitude was that the bank wouldn't look for the mortgage monies back after the cheque had been drawn down. In the end I found another way around it but if you become desperate that is one option you have.
 
IIB should be OK with him having no life cover but he will need a letter of decline (assuming he is declined) and this won't be issued with the GP and specialists report. The life companies do their best to get these but in often takes a phone call (or 20!) from the patient to get the reports done up. Time for your brother to start badgering the doctors.....

Sarah

www.rea.ie
 
Art said:
Yes -The broker's attitude was that the bank wouldn't look for the mortgage monies back after the cheque had been drawn down. In the end I found another way around it but if you become desperate that is one option you have.
Click to expand...


Is this just this brokers attitude or is it something that would actually happen in practice ie. not look for monies back. I thought in a lot of cases that as it is a condition of the mortgage (unless accepted w/out cover) the bank are entitled to seek the money back?
 
Yes the bank are certainly entitled to seek the money back but will not do so is what I was told - it would be a nightmare procedure for them to do it. Obviously though you are taking a small risk here, albeit a very small one.
 
Just to update......Insurance company have come back to him saying that depending on the consultants report, they might cover him at a higher premium but only for 20 years. The life of the mortgage is 35 yrs, IIB bank have said that they would probably not consider waivering as the amount he is borrowing is so high (approx 430K) and also 20 yrs would not be acceptable (or something along those lines).

So it looks like, even if he does manage to get his hands on the consultants report he may be refused anyway.

Any one any (more!!) suggestions as to what he can do at this late stage????

Will this mean that he probably wont be able to purchase a house at all???? It seems ridiculous..............

Thanks very much.
 
Sounds like they are not being very helpful! Can only suggest you either appeal to IIB or else contact other insurance companies and be completely honest with them about the situation. If the condidtion isn't life threatening, I can't believe there isn't another insurance company out there that wouldn't be willing to take on the risk albeit with a loaded premium. Hope he succeeds anyway.
 
I was actually in much the same position a couple of years ago. I was not a FTB but but was upgrading. About 12 years ago I had a brain injury but thankfully with no long lasting effect. Life cover was refused by the insurance company Senior Medical Officer after PMA reports from my GP and consulatant. My own GP felt this was a gross over reaction and challenged the insurance company in writing stating some facts (of a relevant medical nature). In short the insurance co offered life cover within 2 days of recieving the letter albeit at a preminum (about 40% - which worked out at about €15 a month).
Hope this offers some hope.
 
Hi there,

Just to let you know he was finally approved for cover for the full term of the mortgage (paying a higher premium however) and signed contracts yesterday!!!! Huge thanks to everyone who replied and advised, cheers!!
 
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