Mortgage applications for those with diabetes ‘delayed for up to year’

Mortgage applications for people with diabetes are being put on hold for six or 12 months as mortgage protection insurance has been refused, the Dáil has heard.

Minister for Finance Paschal Donohoe pledged to engage with banks about cases where borrowers cannot draw down their mortgages because they are refused mortgage protection insurance due to health conditions that could make them more susceptible to Covid-19.

He told Sinn Féin finance spokesman Pearse Doherty that the issue had been raised by a number of TDs and constituents in recent days.

“While I can’t instruct the banks with regard to this I will engage with them on this matter because I know in what is such a difficult time for so many, these decisions can make the situation even harder”.

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Mr Doherty said there had been “heartbreaking” cases where “they’ve basically bought the house and they’ve paid the deposit. The mortgage is approved and at the very last hurdle they fall.

“But not only have they fallen, they’ve lost the house, they’ve lost the deposit and the law allows for the bank to make an exception in that case.”

The Donegal TD said “the insurance industry needs to look at their policy and what’s happening in particular where people have diabetes”.

He said this was being raised a lot with TDs. “If you’ve got diabetes a lot of providers are putting applications on hold for six months or 12 months and that needs to be addressed” under a provision in the Consumer Credit Act.

Mr Donohoe said the lender can in most cases legally require an applicant to have mortgage protection insurance before granting a mortgage.

But in certain cases such insurance protection is not necessary or would not be appropriate and the law provides for “a number of limited exemptions” such as where the borrower “belongs to a class of persons”.

Mr Doherty asked the Minister to also raise the issue with the insurance industry because some banks owned insurance companies.

“Bank of Ireland have their own insurance company which is not providing mortgage protection cover for anyone who had symptoms of Covid over the last three months. They’re putting those on hold for at least a month.”

The Minister said “I do appreciate the distress that is it is causing” and he planned to explore the matter further “with the banks and why individual decisions can be made and to see if there are any policy consequences in it”.