Insurance with Your Mortgage | Mortgage Protection & Buildings (2024)

Mortgages

Choosing the right insurance to protect you and your home is vital. Here’s the mortgage insurance you must have in Ireland, and other types you may want to consider.

Is mortgage insurance compulsory?

Two types of insurance are a condition of getting a mortgage when you buy a house in Ireland.

These are:

1. Mortgage protection insurance
2. Buildings insurance

What is mortgage protection insurance?

It’s an insurance policy that will pay out and clear your mortgage balance if you die during the term.

Mortgage protection must cover the full loan amount and run for the full mortgage term.

It offers financial protection to both you and the lender because:

• You won’t be passing on any mortgage debt to your loved ones
• Your lender has a guarantee that the loan will be paid off

Mortgage lenders in Ireland can only authorise a mortgage if this protection is in place unless you fall into one of the exceptions set out by law.

Types of mortgage protection

There are two main types of mortgage protection.

• Reducing term cover For repayment mortgages where the capital and interest are paid off. The cover starts at full mortgage value but reduces as the term progresses and the mortgage is repaid.
• Level term cover For interest only mortgages where only the interest of the loan is paid off, not the capital. The cover is for the full loan amount and remains level throughout the term.

You can find out more about what mortgage protection covers, costs, and how to choose the right policy in our guide to mortgage protection in Ireland.

What is buildings insurance?

Buildings is a type of home insurance that insures the building itself and pays out if it gets damaged. It covers the cost to repair or rebuild your home if the damage can’t be repaired.

As well as the main structure of the building, e.g. the roof, walls and floors, the cover also extends to:

• Garage and any outbuildings
• Fixtures and fittings, e.g. a fitted kitchen
• Gates, surrounding walls and patios

The most common causes of damage you’re insured for include:

• Fire
• Floods and storms
• Theft and attempted theft
• Water and oil leaks
• Falling trees and branches
• Subsidence

Our comprehensive guide to buildings insurance includes details about policy exclusions, extra cover you can add, and the amount of cover you need.

Other types of insurance to consider

There are other kinds of insurance worth considering with a mortgage. They’re not essential but can offer peace of mind and additional financial protection if things go wrong.

Income protection

Income protection, also known as salary protection, can replace some of your income if you get sick or injured and cannot work after a set term.

Your cover needs will depend on:

• Company sick pay entitlements
• Other accessible funds
• Other insurance policies you have, e.g. serious illness cover

You can learn more about how income protection works and how to choose the best policy in our guide, Should you get income protection insurance?.

Serious illness cover

This cover, also known as critical illness cover, can pay out a lump sum if you’re diagnosed with a serious condition that’s listed in the insurer’s policy document.

You can choose the amount of cover you want, e.g. €100,000, and use your lump sum to help:

• Cover your everyday bills and living costs
• Pay for any treatment you require
• Adapt your home to support your needs

You can add serious illness cover to a life policy, including your mortgage protection policy, or get a standalone policy.

To find out more about serious illness cover and decide whether it’s right for you, read our guide, Should you get critical illness cover?.

Contents insurance

Contents insurance is a type of home insurance that covers the things in your home, not the building itself. This includes:

• Furniture and furnishings
• Clothes and shoes
• Valuables, e.g. jewellery, watches and antiques
• Electrical items
• Cash and documents

You can claim on your contents insurance if any items are lost, stolen or damaged, e.g. from fire or flood. Accidental damage is not usually covered as standard, but you can add it to your cover.

Find out more about contents insurance and how to find the right policy in our guide to contents insurance.

So, what insurance do you really need?

The only two insurances that are compulsory with a mortgage are mortgage protection and buildings insurance. The other insurances are advisable, but they depend on your individual circ*mstances.

To keep insurance costs to a minimum:

• Check any insurance policies you already have so you don’t pay for the same cover twice.
• Combine buildings & contents insurance. Here’s how to get the right home insurance cover.
• Shop around for quotes and take time to read the policy documents on your shortlist.