This article is from page 4 of the 2013-08-27 edition of The Clare People. OCR mistakes are to be expected so download the original SWF or the rendered page 4 JPG
CLARE families in mortgage difficulty could face a double blow should a a family member pass away unexpectedly. Spancilhill financial aid charity Dealing With Debt (DWD) says that hundreds of Clare families could face eviction from should a wage earning family member pass away – as the insurance will not cover the full cost of mortgages in arrears.
With more than 2,000 Clare families in arrears or in interest-only payment schemes, research from DWD indicated that the vast majority of these are under insured.
The insurance difficulty comes about when a mortgage goes into arrears as the life insurance cover associated with the mortgage is tied to the additional payment schedule.
Should a mortgage holder who is in arrears pass away, the insurer would only pay out the portion of the mortgage which is scheduled to be out- standing – according to the original mortgage timeline.
“If you had a € 400,000 mortgage lets say, and you run into financial difficulty and have to pay a reduced rate – maybe even interest only. After a while you would find yourself in a situation where you owe € 400,000 of a mortgage, but you only covered for € 300,000,” said Joe Corbett of Dealing With Debt.
“So you have situation of a family who is already struggling, gets hit with tragic death, and then they also face maybe € 100,000 in debt that they didn’t know they would have.
“We are seeing more and more of this. People are taking the risk that nothing will happen to them – and hopefully nothing will. People don’t take the insurance into account when they are in difficulty.
“When families are struggling to pay a mortgage then the insurance can be the last thing on their mind. It is a worrying situation and something that is becoming more and more common in Clare.”