Switching Mortgage provider and switching mortgage protection

aoc77

Hi. I am currently switching mortgage from BOI to Permanent TSB. I have a Mortgage Protection Policy with BOI Life which I would also like to switch.

BOI Life have said it is not a problem to switch the policy. According to them the normal process is that I sign a deed of assignment with my new lender and that the solicitor gives an undertaking to switch the assignee from BOI to TSB on the day the TSB mortgage is drawn down to pay off the BOI mortgage.

However, I have run into difficulties with TSB. They have said that my life policy has to be assigned to them in advance of drawdown. Obviously this can't happen as it must remain assigned to BOI until that mortgage is discharged. What this means is that I have to take out a new policy (which TSB want to sell me!) and I will have 2 policies in place at the same time. Obviously my new policy will be more expensive as I am now older. Afterwards I will probably cancel this new policy and just keep my old one ,which I can then reassign.

When I told this to BOI Life they told me (and I quote) "that is a load of rubbish - we've never had this situation before". According to them the undertaking from the solicitor is the norm and everything happens quite seamlessly on the day. The new lender just needs to know and see that an adequate policy is in place and that we have signed a deed of assignment to come into effect on the day of the switch.

I am so confused and have spent hours on the phone to both banks and insurance companies as they are all claiming that what the other is saying is rubbish!

I have tried to tell Permanent TSB that there is no risk: if the TSB mortgage was drawn down and I died in that short period before the BOI loan was discharged, the protection would be used to pay BOI mortgages and the TSB mortgage would be returned as it would not be required. But they don't seem to get this at all!

Looking forward to hearing if any of you have had this experience in the past. Surely mortgage switches are quite common??

coylemj

Take out a new mortgage protection policy, you can get quotes online from all of the life companies. Assign the new policy to TSB.

As soon as you have drawn down the new loan, switch the assignment on the BOI Life policy to TSB, then stop paying the premiums on the new policy.

Edit: I just noticed that you have already suggest this approach. A tactical approach worth considering is to simply tell the TSB guy that you are taking out a mortgage protection policy with (named insurance company) so he realises that you are not buying his policy at which point he will probably back down and accept your plan as outlined above. But your fallback plan will need to be to take out a new policy (with anyone but TSB) with the intention of cancelling it after you get the BOI policy reassigned.

Liam D Ferguson

In this instance, Permanent TSB are wrong. The deeds of your home are also a fundamental part of the documentation for the mortgage.
Permanent TSB wouldn't want to release the new mortgage monies until they have the deeds in their possession. But Bank of Ireland wouldn't want to release the deeds until their loan has been paid off. Chicken and egg scenario that has a standard resolution. Deeds are released on accountable trust to your solicitor while your re-mortgage application is ongoing. Solicitor undertakes that if the re-mortgage doesn't complete, s/he will return the deeds to Bank of Ireland but if it does, s/he will send the deeds to Permanent TSB. No reason why the exact same thing can't be done with the life insurance policy document.

But if you run into a brick wall with Permanent TSB, the above suggestion from coylemj will work also.

By the way - have you got quotes for a new Mortgage Protection policy? While, as you say, you are older now than when you started the original policy, the rates for life insurance have come down in recent years and Bank of Ireland Life are rarely the cheapest anyway. It might be worth getting a quick quote.