Getting mortgage protection is usually a compulsory part of the mortgage application process. However many people apply too late, or too early. So when is the right time?
If you’re in the process of applying for a mortgage you’ll be aware of just how important mortgage protection is. If you’re unsure what this type of insurance does, see this guide for a quick reminder.
However, for many prospective homeowners, taking out mortgage protection can be an afterthought, so they apply for cover far too late in their mortgage journey, despite it being required by law in most cases for you to get a mortgage. Conversely, many first-time mortgage applicants can also apply far too early, which can be a waste of time.
So, when is the right time to apply for mortgage protection and what things should customers take into consideration before doing so?
We take a look...
Don’t apply too soon
Applying for insurance cover earlier rather than later is generally considered a positive thing. However, when it comes to mortgage protection cover, there is a time that’s considered ‘too early’.
Recently at bonkers.ie we have been seeing many customers applying for mortgage protection three to six months before the drawdown of their mortgage, which is far too soon.
When you apply and get approved for mortgage protection the policy must go into force within 90 days, sometimes less, depending on the insurer. If not, your application will lapse and you’ll need to re-apply all over again, which is a considerable waste of time for everyone.
So, if you don’t have a firm drawdown date for your mortgage it’s usually better to wait until you get closer to that time.
All that being said, there are advantages to taking out cover that bit earlier...
Start your cover early
Sometimes customers forget that even though you may not have an official drawdown date in writing, it’s still possible to start your cover early by adding another year or so to your mortgage protection policy.
This can be very helpful and give you peace of mind, especially if your drawdown is delayed by a couple of months or more.
So let’s say you plan to take out a mortgage over 30 years, you could apply for a mortgage protection policy with a 31 or 32-year term, giving you plenty of time to find your new place and draw down your home loan.
It won’t matter if your mortgage protection policy starts before you’ve drawn down your mortgage as you’ll have given yourself plenty of wriggle room.
There are a number of benefits to starting your mortgage protection cover early:
- Lower premium - If you wait to start your policy until you get an official drawdown date and you pass a birthday in the meantime, your premium will go up. This is because the price of insurance increases the older you get. And while it may not be much, every little helps!
- Illness cover - Once you take out your mortgage protection policy it functions as a basic life insurance policy, something many people aren’t aware of. Should you take out cover early and become ill during the time it takes to officially draw down your mortgage you will still be covered, but if you don’t, you won’t.
So, how does it work?
All you have to do is let your insurer or broker know that you’d like to take out cover early by adding another year or so to your term. You’ll be covered for the period before your mortgage has been officially signed off, and it’ll give you more time and energy to spend on other parts of the mortgage process.
Don’t apply too late
Whatever you do, don’t apply too late.
The mortgage application process can be a long and winding road, with many obstacles to overcome along the way, but unfortunately, for some customers, applying for mortgage protection insurance can be an afterthought.
Despite mortgage protection being required by law in most cases before drawing down your mortgage, many mortgage seekers leave taking out a policy until the last minute which can often delay moving in times as well as all the other moving parts.
That’s because although it’s possible to get cover in under one hour with bonkers.ie, this very much depends on the applicant being in good health. If you have an illness, chronic condition, high blood pressure, or ailment, this can require doctors’ reports, medical certificates and exams, which can all take time. Quite often we hear horror stories of first-time buyers losing out on their dream home because they couldn’t get cover in place quick enough.
So, being prepared and giving yourself plenty of time to apply will help make things go smoothly. But as we’ve said, unless you want to start your policy early, you don’t want to give yourself too much time either.
So this begs the question...
When is the right time to apply?
At bonkers.ie we like to apply the Goldilocks principle when it comes to applying for mortgage protection insurance. That is: don’t apply too soon, don’t apply too late, four to six weeks is the perfect date!
Why a period of 4-6 weeks?
Here are the main reasons why one month or slightly longer is the perfect time to apply:
- Process time - Applying for cover between four to six weeks in advance of the drawdown of your mortgage will give your insurance company ample time to process your application and get your cover in place.
- Medical issues - Should you have a medical issue the insurance company you’re applying through will usually look for a medical report from your doctor or specialist. Additionally, sometimes further tests and sign off may be required depending on the illness and this can often take a number of weeks to complete. This is especially true as COVID-19 protocols must still be strictly observed in hospitals and medical practices, which could lead to a delay in tests being carried out and results being returned. So it’s best to give yourself some time if you know this could be an obstacle.
Get cover today
If, however, you’re in general good health you could have cover in place in under one hour when you apply on bonkers.ie.
See how quick and hassle-free the process can be when you apply online. Check out our mortgage protection Quickstart Guide for more information on the process.
For more information before applying for mortgage protection insurance you might find the following guides helpful:
- People often make the mistake of thinking that they have to take out mortgage protection cover from the bank they’re getting their mortgage from. Learn more about how you can get the best value by shopping around here.
- Take a look at this list of 6 things to consider when taking out mortgage protection insurance to ensure you’re fully informed.
- If you’re struggling to get mortgage protection cover due to illness or previous poor health, you can review your options here.
Keep up to date with our mortgage protection-related news by reading our blog and guide pages.
Do you have any questions about mortgage protection?
Don’t hesitate to get in touch with us if you have any questions about applying for mortgage protection insurance. As part of our in-house insurance broker service, we have a team of qualified advisors on hand to help answer any questions you may have.
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