The Switching Gap: Are Irish Homeowners Overpaying for Mortgage Protection?

What is the Switching Gap?

The Switching Gap is the difference between the number of homeowners who could benefit from reviewing their mortgage protection life insurance and the number who actually review or switch their policy.

The gap matters because mortgage protection is usually arranged at a stressful point in the mortgage journey. A buyer is trying to complete a property purchase, satisfy lender requirements, manage legal documentation and secure drawdown. Once the policy is assigned and the mortgage completes, the premium often becomes a background direct debit.

Over time, the homeowner may focus on the mortgage interest rate, property value and monthly repayment — but not on the life cover attached to the mortgage. The result is that a policy taken out years ago may still be in force even though the mortgage balance, remaining term, household circumstances or available market pricing have changed.

Why mortgage protection gets forgotten

Mortgage protection is prone to review inertia for several reasons. It is often arranged at mortgage drawdown, when the borrower is under time pressure. It may be treated as a lender requirement rather than a reviewable financial product. The monthly premium may look small beside the mortgage repayment. It can be medically underwritten, making replacement feel more complicated than switching utilities or broadband.

The Competition and Consumer Protection Commission confirms that borrowers can buy mortgage protection from a lender, insurance company or broker — and do not have to take the lender's policy.

Do I have to buy mortgage protection from my bank?

No. A lender will generally require mortgage protection for an Irish housing loan unless a statutory exception applies under Section 126 of the Consumer Credit Act 1995, but the borrower does not have to buy the policy from the bank. The CCPC's consumer guidance is clear that borrowers may buy mortgage protection from their lender, an insurance company or through a broker.

How many Irish homeowners may be affected?

There is no official Irish dataset that identifies every mortgage protection policy, its premium, policy age and equivalent current-market quote. For that reason, the Switching Gap should be treated as a conservative scenario estimate rather than an official measured statistic.

At end-June 2025, there were 698,335 private residential mortgage accounts for principal dwelling houses in Ireland, with a total value of €106 billion (Central Bank of Ireland). Using that mortgage-account base and applying conservative assumptions, the research estimates:

Why small monthly savings matter

Mortgage protection savings do not need to be dramatic to matter. The CCPC gives the example that even a €5 monthly difference in mortgage protection price can save more than €2,000 over a 35-year mortgage term. If 100,000 households were overpaying by only €5 per month, the annual excess premium would be €6 million.

A Royal London Ireland mystery shop found that, in the scenarios examined, buying the same level of mortgage protection through a financial broker was on average 27.5% cheaper than through a mainstream bank.

What Irish Central Bank research tells us

Irish Central Bank research shows that many mortgage borrowers do not act even when meaningful savings are available. In one loan-level study of approximately 46,000 borrowers, only 33% of eligible borrowers took up a cost-free refinancing offer when it was optimal — meaning approximately 67% did not act. The same research estimated that non-refinancing borrowers gave up average savings of €490 in the first year and €5,400 over the remaining term of the mortgage.

Mortgage protection is not the same product as a mortgage interest rate, but the evidence strongly supports the wider point: Irish mortgage-related financial decisions are vulnerable to inertia, inattention and perceived switching complexity.

When should mortgage protection be reviewed?

Mortgage protection should be reviewed at predictable trigger points rather than left to chance. The most practical trigger is the mortgage-rate review — the homeowner is already looking at mortgage cost, so it is a natural moment to check whether the mortgage protection remains suitable and competitive.

Other review triggers include: a mortgage switch or refinance, a top-up or equity release, a change in smoking status, a major health or lifestyle change, marriage or separation, the arrival of children, or simply if the policy has not been reviewed in three to five years.

When should a homeowner not switch?

Switching mortgage protection is not always the right answer. A homeowner may be better keeping an existing policy where their health has worsened since the original policy was taken out, where age now makes replacement cover more expensive, where the existing policy has valuable conversion or guaranteed insurability options, or where there is any risk of a gap in cover.

The right principle is simple: review first, switch only if suitable.

How to review mortgage protection safely

A proper mortgage protection review should follow these steps in order:

1. Locate the existing policy schedule and note the premium, cover amount, remaining term and life assured.
2. Check whether the policy is assigned to the current lender.
3. Compare the policy against the current mortgage balance and remaining term.
4. Check for policy options such as conversion or guaranteed insurability.
5. Consider health, smoking status and underwriting history before applying for replacement cover.
6. Request like-for-like and advice-led alternatives from a qualified adviser or broker.
7. Keep the existing policy live until any replacement is accepted, issued and active.
8. Cancel the old policy only after continuity of cover is confirmed.