Don’t be fooled by your mortgage providers’ Home Insurance

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When it comes to home insurance, the golden rule is that any deal your mortgage provider offers you will probably be more expensive than you could find elsewhere.money house costs

Mortgage providers work on the assumption that either you think you’re legally bound to take out cover with them or you can’t be bothered to shop around. Unfortunately for many people, they’re right on both counts.

Why do mortgage providers insist on cover?

A legal requirement of having a mortgage is also having insurance for the property; the loan provider wants to make sure, ultimately, that if your home burns down you’re able to afford to rebuild it.

So it’s the buildings element that a mortgage provider insists you have in place if they are to provide you with a mortgage.

Buildings cover protects you (and, essentially, the mortgage company!) from the financial costs of damage occurring to the main structure of your property, as well as outbuildings and other features such as walls and driveways.

As repair and rebuild costs can run in to tens of thousands, most people wouldn’t be able to afford to bear them without insurance. And without restoration work the mortgage provider could potentially, if it came to it, be left re-possessing a property worth much less than the outstanding mortgage.

Insurers therefore insist that as a condition of your mortgage you have home cover in place.

Don’t assume you’re being offered a good deal

As most mortgage companies also offer cover as part of their financial product range, they nearly always try and sell their own policies to borrowers as they make more money that way. And many people wrongly think they’re obliged to accept the deal they’re offered.

In fact, recent figures from Sainsbury’s show that 1.5million homeowners assume that this is the case. Don’t fall in to the same trap.

The key is to remember that you’re not bound to accept your mortgage provider’s deal. As long as you can show them you have arranged cover with another provider, you’re fine.

First-time buyers, long-term owners or buy-to-let

Whether you’re a first-time buyer, a buy-to-let landlord, or have a long-standing mortgage with the same provider, it pays to shop around.

If you’re applying for a mortgage for the first-time, compare deals by using the insurance comparison tools available online; it only takes a few minutes to get a good idea of what’s available after entering your details and requirements, or you can call up a broker

If your cover is coming up for renewal, the same rule applies. However, you might need to give at least four weeks’ notice to your current provider that you’re switching, so start doing your research with a good couple of months to go.

Policy Expert

We’re dedicated to helping customers find the insurance policy that’s right for them. Our customers are at the heart of everything we do, so we have a team of experts with a real passion for making sure people get the cover that’s right for them, at the right price. To speak to one of our experts, call 0203 014 9300 or email ask@policyexpert.co.uk

 

The views expressed here are solely those of the author and do not necessarily reflect the views of Policy Expert.