Bank refuses to release mortgage for woman deemed at higher Covid risk

Woman says she is being penalised for being overweight following the birth of her child

A bank has refused to release a mortgage loan to a woman seeking to buy a house over an issue connected to her mortgage protection policy.

The woman told The Irish Times she was refused cover by life insurance companies in the Republic because, they said, her high BMI placed her at greater risk of a Covid-19 complications.

However, despite the woman subsequently sourcing cover with a UK-based insurer, her bank is still refusing to release the mortgage, she said.

The woman, in her early 30s, had a baby early last year and said her BMI had been high since the birth.

She pointed out that she had been medically assessed by a nurse working on behalf of an UK-based insurance company subsequently offered cover for a 10-year period.

Despite this her bank said this cover was insufficient. The bank’s refusal to let her draw down the mortgage was putting the purchase of the home she is under contract to buy at serious risk, she said.

“I am at the end of my tether but I am not giving up without a fight,” she said. “I had a baby in 2020 and I haven’t lost the baby weight. I know that, but the insurance companies and now the bank are penalising me for that,” the woman, who asked not to be named, said.

The woman said she had a permanent, pensionable job with a death-in-service benefit substantially higher than the value of the mortgage of €116,000 that she applied for.

She also said she has a separate financial safety net in place and now had mortgage protection cover for 10 years. She has also restructured the term of the proposed mortgage by reducing it to 16 years.

“I am also putting down a huge chunk of savings and the loan-to-value ratio is less than 80 per cent.” However, the bank has refused to budge.”

The woman said she went sale agreed on what would be her first home last December and was set to move out of her rented accommodation at the end of March.

“I literally have nowhere else to go and the vendor is extremely frustrated and wants to put it back on the market. I will have to sleep on my parents’ couch from Saturday.”

Sligo Leitrim TD Marian Harkin has raised the woman's case - one of a number involving people struggling with insurance due to Covid - with Minister for Finance Paschal Donohoe.

Ms Harkin told this newspaper that the so-called underlying condition that saw her refused mortgage protection cover by Irish insurers is not one which is considered sufficiently serious by the HSE to require an early Covid-19 vaccination. "The insurance companies are basically making up their own rules," she said.

Ms Harkin said the would-be home buyer was being unfairly targeted by both the insurance companies and her bank.

“Her hands are tied and while she could lodge an appeal with the Ombudsman, that will take months, the house will be gone, the approval will be gone. So even if she won the case what would it be worth to her?”

Ms Harkin said it was “kind of impossible situation where the bank is riding roughshod over her ability to own her home even though she has a young child and a good job.”

Last week, Ms Harkin asked the Minister for Finance about remedies available for those refused mortgage protection insurance.

Mr Donohoe said it would not be appropriate for him to comment on specific cases and stressed that neither he or the Central Bank of Ireland cold interfere in "the provision or pricing of insurance products or have the power to direct such companies to provide cover to specific individuals or businesses".

However, he said he was “aware of reports of some customers experiencing issues in obtaining mortgage protection cover as a result of having higher risk conditions particular in the context of Covid-19”.

He said he had “consistently stated that in the context of Covid-19 [he expected ] insurance firms to treat their customers fairly, honestly, and in accordance with the Central Bank’s Consumer Protection Code.

Accordingly, the Government will continue to engage with the insurance industry in relation to how it responds to, and works to protect its customers’ needs.”

He said officials from the Department of Finance had contacted Insurance Ireland on the issue of mortgage protection insurance and been told that "while most customers are still able to get life; critical illness; or mortgage protection insurance at this challenging time it is aware of a small number of individual cases where a final decision on some applications is being postponed for a period where applicants have a COVID-19-related health condition".

Insurance Ireland also said that while it was “unaware of any cases where life cover has been denied, such policies are assessed on a case-by-case basis and that underlying health conditions are taken into account by the underwriters, as was the case pre-Covid-19.

Insurance Ireland has also said that it understands that mortgage protection is not a universal requirement by banks, and that there are waiver conditions set out in the Consumer Credit Act where the lender may be able to proceed without the protection cover in place for mortgages in certain situations and this is at the lender’s discretion.”

Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor and cohost of the In the News podcast