Many of those in arrears 'are underinsured'
Published 11/02/2014 | 05:34
UP to 2,300 mortgage holders in Co Wexford are likely to be in arrears, according to a study of the Central Bank's most recent quarterly arrears report, carried out by Protection experts Caledonian Life.
The report, which looked at the growing arrears on the more than 100,000 Irish homeowners in difficulty, also found that many of these families are also significantly underinsured as a result.
Tony Burke, Caledonian Life representative in Wexford, said there were 18,100 mortgaged properties in Wexford and the nationwide average for mortgage arrears is 12.9 per cent.
'So unfortunately it safe to say that some of these mortgage holders will be behind on their repayments. Where the mortgage repayments fall behind, not only do homeowners fall into arrears, but their mortgage protection cover also becomes insufficient,' he said.
Mr Burke said these homeowners will inevitably find that a substantial proportion of their mortgage debt will remain outstanding, should either party die unexpectedly and the mortgage policy pays out.
'This may come as a shock to a surviving spouse or partner at a time when they can least afford it, as the standard mortgage protection policy used in Ireland simply doesn't allow for arrears, particularly at the current scale,' he said.
The experts at Caledonian Life say that when homeowners take out a mortgage they should also take out a life cover policy for the same amount. The life cover reduces steadily, as in the normal course of events the outstanding mortgage balance is expected to fall as it's being repaid.
However, Caledonian's analysis suggest homeowners in arrears of more than two years could find that they are underinsured by up to 17 per cent of their mortgage or an average of €36,000 on a typical total outstanding mortgage balance of €209,000 (€173,000 plus arrears of €36,000).
Mr Burke suggests that those in mortgage arrears should contact their local financial broker.