What insurance do you need with your mortgage

Getting the right insurance to protect you and your home financially is vital. Here’s the insurance you need in Ireland, and other types you may want to consider.

Is insurance compulsory?

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

  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: Designed for repayment mortgages where the capital and interest are paid off. The cover starts at full mortgage value but reduces as the term goes on, and your mortgage is paid off.
  • 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, cover also extends to:

  • Your 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 covered against 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 how much 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 need will depend on:

  • What company sick pay you’re entitled to
  • Other funds you have access to
  • 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 choose the amount of cover you want, e.g. €100,000, and you can use your lump sum to help:

  • Cover your everyday bills and living costs
  • Pay for treatment you need
  • 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. Find out more about how serious illness cover works when you add it to your mortgage protection insurance in our guide.

To find out more about serious illness cover and 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 circumstances.

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.

Compare mortgage rates & deals

Find a range of first time buyer and home mover mortgage deals in Ireland using our comparison.

Warning: If you do not keep up your repayments you may lose your home. Warning: The cost of your monthly repayments may increase. Warning: You may have to pay charges if you pay off a fixed rate loan early. Warning: If you do not meet the repayments on your loan, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit in the future. Warning: The entire amount that you have borrowed will still be outstanding at the end of the interest-only period. The payment rates on this housing loan may be adjusted by the lender from time to time. (applies to variable rate loans only) Information provided and Interest rates quoted valid at 18/04/2024