Homebuyers warned contracting virus could put mortgage at risk

Homebuyers have been warned that their chances of securing a house are at risk if they contract coronavirus.

A positive Covid-19 diagnosis with complications could mean critical delays for mortgage protection insurance, brokers have warned.

Homebuyers warned about mortgage approval

Potential Homebuyers warned ontracting virus could put mortgage at risk : Credit to

Covid Precautions

People who don’t take Covid precautions because they think the disease won’t hurt them should consider the potential financial cost, said broker Michael Dowling. ‘Growing numbers of younger people are testing positive for Covid and the way things are going, it [mortgage refusals] could well become a problem,’ said Mr Dowling, of Dowling Financial.

A positive Covid-19 diagnosis for applicants could see their mortgage application delayed, he said. ‘Life companies don’t know the long-term consequences of this, so there is a specific Covid-19 question on life [i.e. mortgage protection] policies now.’

People are being advised to get cover before applying for a mortgage.

People are being advised to get cover before applying for a mortgage.

An example of a life document provided by Mr Dowling states: ‘If a prospective customer has Covid-19 symptoms, has been advised to get tested, or has been diagnosed with it, we will need to wait until full recovery and a period thereafter before providing cover.’

If the applicant recovers fully and gets back to work, the mortgage protection application can be processed relatively quickly. However, if they suffer longer-term consequences from Covid, further delays may ensue.

‘Around 80% of people who develop Covid-19 only have mild symptoms, so fully recover,’ said Carol Brick, managing director of CWM Wealth Management. She said life insurers should be able to offer acceptance terms within one to three months in most cases once symptoms have fully resolved with a full return to normal work or other activities.

‘We have had a number of applicants for all types of life cover who tested positive for Covid-19 and recovered fully and all were approved with no issues,’ she said. However, it is different if there are underlying health problems and/or the condition required treatment as an in-patient in hospital.

‘If they have not been able to return to work or were treated as an in-patient, then it may prove more difficult to obtain cover in the short to medium term following the diagnosis and subsequent recovery,’ she said.


Delays in processing mortgages for ‘high risk’ applicants with pre-existing conditions have also been delayed for nine months with no end in sight to their predicament, another broker revealed. ‘There are a lot more people losing out on cover (and therefore mortgages) because of Covid, than is generally known,’ said Nick McGahan of broker

When the virus erupted in March, ‘clients with certain health conditions couldn’t get cover for their mortgages so I put a note on their file to get back to them in six months time,’ he said. ‘Fast forward to the present day and I’m getting in touch with those clients to sadly report that these unfortunate souls, who have their mortgage approval in place, now can’t buy a family home due to factors completely outside their control – an underlying health condition and Covid.

‘If you fall into any of the [high risk] categories, it’s going to be tricky to get life insurance or mortgage protection.’ Martina Hennessy of financial advisers warned of situations where contracts have been signed because buyers have loan approval – and buyers can’t meet their legal obligations because Covid-19 strikes and negates their mortgage protection cover just before they draw down funds.

She advises clients to ‘mitigate the risk’ by starting cover before the signing of contracts rather than just pre-closing – but to be careful to extend the policy if they need to afterwards.


Story by