Covid 19 can damage your wealth as well as your health - mortgage hopefuls warned.

Younger people who flout Covid 19 rules have been warned to consider the potential cost of the disease to their wealth – as well as their health.

A positive Covid 19 di

agnosis with complications could mean critical delays at least for mortage protection cover applications, for example.

And people who don’t take Covid precautions because they think the disease won’t hurt them should consider the potential financial cost, warned 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,” he said Michael 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,” he said.

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, much longer delays may ensue.

“Around 80% of people who develop COVID-19 only have mild symptoms so fully recover,” said Carol Brick BA QFA PIB, Managing Director, CWM Wealth Management.

She said life offices should be able to offer acceptance terms within 1-3 months in most cases once symptoms have fully resolved with a full return to normal work or other activities.  

“We have had a number 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 an entirely different if there are underlying health problems and/or the COVID-19 condition required treatment as an in-patient in hospital.  

“If they have not been able to return to work or were treated as in 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 people are losing out on cover (and therefore mortgages) because of Covid than is generally known,” said Nick McGowan of Lion.ie.

When Covid 19 erupted back 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 6 months time,” he said.

“Surely by then, this would have all blown over. Fast forward to 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.” “ This is why it is so important to know the most sympathetic insurer for your condition. All the insurers are not taking the same approach.  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 Doddl.ie 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.

“An application for mortgage protection would be made when an applicant is sale agreed (and the level of cover and term known) but the policy is normally just put live prior to mortgage draw down. 

The risk here would be that a mortgage applicant has signed contracts and then cannot get requisite cover and draw down the mortgage.”

She advises clients to “mitigate the risk” by commencing cover before the signing of contracts rather than just pre-closing – but to be careful to extend the policy if they need to afterwards as it could finish early otherwise.