Homeowners warned they may be overpaying for mortgage protection

Switching from a mortgage protection insurance policy sold by the bank that provided the mortgage to another provider could lead to savings of €6,000 for a family with 15 years remaining on their mortgage.

Using a broker rather than getting cover from a bank can yield savings of up to 28pc, research by life insurance and pensions company Royal London Ireland shows.

Mortgage protection insurance is a form of life insurance designed to protect mortgage repayment.

If the policyholder dies while the policy is in force, the policy would pay out a capital sum sufficient to repay the outstanding mortgage.

Cost comparisons undertaken by Royal London Ireland compared the premiums quoted by a bank with those secured through a broker.

Proposition director at Royal London Ireland, Joe Charles said: “In both scenarios we looked at, a mortgage protection policy with identical cover was almost 30pc more expensive with a bank than through a financial broker, and there is a very simple reason for this.

“Brokers have access to multiple life companies’ products and prices, rather than just one provider, which is generally the case for banks, so they can shop around to get the best product and price to meet their customers’ individual needs.”

Mr Charles said the findings demonstrate that the broker market is far more competitive and offers better value to customers than dealing directly with a bank.

Many people take out mortgage protection cover with the lender that is providing their mortgage. But they are free to buy from any provider at any point when paying the mortgage.

The research found that a couple aged 30, with a mortgage of €250,000 over 35 years, could save just under €8 a month, or close to €3,000 over the term of the mortgage.

Both couples were looking for dual-life mortgage protection.

This type of policy is designed to cover two people, usually partners or spouses, and it typically pays out upon the death of the first person insured.

Cover then continues for the surviving individual but on a reducing basis. The primary purpose of this insurance is to ensure that the mortgage debt is repaid in the event of a death.

Mr Charles said: “In both scenarios, we found that purchasing the same level of mortgage protection through a financial broker was significantly cheaper than through a mainstream bank – on average by 27.5pc.”

He said the difference in cost is substantial over time.

The Royal London Ireland executive said that by reviewing their policy, consulting a financial broker and possibly switching, homeowners can make significant savings.

With new mortgage providers entering the market, and the likelihood of an European Central Bank interest rate cut later in the year, many people will be looking to switch mortgage providers and they should take the opportunity to also look at their mortgage protection cover, he said.