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County Council Mortgage - Mortgage protection policy

  • 17-01-2019 4:39pm
    #1
    nimrod_himself
    Registered Users Posts: 16 ✭


    Hi,
    Quick question regarding the above. Does a client taking out a mortgage with the CoCo have to accept the MP that the CoCo arranges for them?

    On the Kilkenny CoCo website I found...
    DO I NEED TO AVAIL OF MORTGAGE PROTECTION INSURANCE?
    Where eligible, the borrower must avail of Mortgage Protection Insurance (MPI) policy under the local authority’s group MPI scheme until their loan has been fully repaid. (Term and conditions of Mortgage Protection Insurance Policy is available on request from Local Authority).

    Which seems to me to be in direct contravention to the law as below
    Consumer Credit Act 1995, Section 127.—(1) A mortgage agent shall not make or offer to make to any person, or arrange or offer to arrange for any person, a housing loan which would be subject to a condition that any financial services, conveyancing services, auctioneering services or other services relating to land which that person may require, whether or not in connection with the loan, shall be provided by the agent or through a subsidiary or other associated body of such agent.

    Any experience or opinions on the above will be greatly appreciated.

    Edit: A third party MP policy would be assigned to the CoCo as required by the Consumer Credit Act.


Comments

  • #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,727 Mod ✭✭✭✭Henry Ford III


    Conditional lending? Sounds dodgy.


  • #3
    ANXIOUS
    Registered Users, Registered Users 2 Posts: 3,095 ✭✭✭ANXIOUS


    The spirit of that legislation is that AIB for example can't say you've to take out MP with AIB if you want a loan. You could go anywhere and get the MP, banks seek security for the loan.


  • #4
    nimrod_himself
    Registered Users Posts: 16 ✭nimrod_himself


    ANXIOUS wrote: »
    The spirit of that legislation is that AIB for example can't say you've to take out MP with AIB if you want a loan. You could go anywhere and get the MP, banks seek security for the loan.

    Yes that's how it is. It just seems in this case that the CoCo are ignoring the legislation and the loan is conditional on taking out the group scheme with their preferred insurer.
    To me it seems illegal and I've written to the CoCo to clarify their position (quoting the legislation) so hopefully they'll back down. My one worry would be that they don't actually have a facility to accommodate third party policies so they'll try to ignore it in the hope it'll go away.


  • #5
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,727 Mod ✭✭✭✭Henry Ford III


    Are County Councils authorised to sell life policies?


  • #6
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    Central Bank do not regulate mortgages issued by Local Authorities hence the reason you can borrow more than 3.5 times income.

    More than likely the condition that you join the group scheme for MPP is that the premium will be included in your repayment and therefore the policy cannot be cancelled during the term unlike if you took out a mortgage with a bank and arranged your own MPP which can be cancelled at any stage.


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  • #7
    nimrod_himself
    Registered Users Posts: 16 ✭nimrod_himself


    Trish56 wrote: »
    Central Bank do not regulate mortgages issued by Local Authorities hence the reason you can borrow more than 3.5 times income.

    More than likely the condition that you join the group scheme for MPP is that the premium will be included in your repayment and therefore the policy cannot be cancelled during the term unlike if you took out a mortgage with a bank and arranged your own MPP which can be cancelled at any stage.

    Thanks, some banks also roll the MP into the direct debit for the mortgage upon inception but it can still be cancelled by separating the two payments into two direct debits. I don't see why this can't be done by the CoCo too.
    I'm going to fight it all the way to the end just for curiousity sake and I'll take it to the ombudsman if I need to. I hate the idea that people are being strongarmed into these policies which are bad value for the average person.


  • #8
    phormium
    Registered Users, Registered Users 2 Posts: 3,345 ✭✭✭phormium


    Is it actually bad value? Did you get a quote from them? They obviously must have an agency agreement or similar with some insurance company and a group policy arranged, it would be interesting to compare the cost with picking the cheapest online quote.


  • #9
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    Did you get a quote from them for the MPP as the interest rates they charge on mortgages are way lower than what is offered by the banks so I presume that if they have a group MPP that it would also be competitive.

    From what I read it is very hard to get a Local Authority Mortgage and it is a condition that your take out the group MPP so if you're not happy perhaps you should go to a different lender where you can organize your own.

    nimrod_himself wrote: »
    Thanks, some banks also roll the MP into the direct debit for the mortgage upon inception but it can still be cancelled by separating the two payments into two direct debits. I don't see why this can't be done by the CoCo too.
    I'm going to fight it all the way to the end just for curiousity sake and I'll take it to the ombudsman if I need to. I hate the idea that people are being strongarmed into these policies which are bad value for the average person.


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