Home owners could be paying over the odds for their home insurance because they mistakenly think they have to purchase their mortgage lender’s products, Gocompare has claimed.
A survey of 2,000 adults by the comparison website found that 14% of home owners arranged their home insurance through their mortgage lender, while 30% of these people believed they had to arrange their home insurance through their mortgage lender as a condition of their mortgage deal.
This equates to almost half a million home owners based on there being 11.1m mortgages in the UK, so 14% is 1.5m and 30% of this comes to 466,200 households potentially caught in a mortgage insurance trap.
More worryingly, 6% were told by their lender that it was a mandatory purchase and 24% think switching away from their lender’s insurance will invalidate their mortgage.
This could also be made worse by estate agents allegedly telling buyers they have to use their mortgage broker to secure a purchase – a practice many deny.
Ben Wilson from Gocompare.com Home Insurance said: “We were shocked to find that so many people still think that their mortgage offer is conditional on buying their lender’s home insurance, and that a significant minority are essentially in a mortgage-linked insurance trap – believing that switching away from their lender’s insurance will invalidate their mortgage.
“We were also concerned that a handful of lenders could be exploiting their relationship with their customers by pushing them to buy their insurance cover.
“If you have a mortgage on your home, then your lender will require you to protect your property with buildings insurance. But it’s up to you where you buy that cover from.
“While buying cover offered by your lender alongside your mortgage may seem an easy option, you might find you’re paying well over the odds. And over the lifetime of a mortgage, failing to regularly shop around for a good deal on home insurance could cost £1,000s in lost savings.”
It would be interesting to see if this is a survey on “New home owners”.
The amount of times We’ve heard “we don’t want to proceed with that property so we will cancel our appointment with your adviser” – You never had to see the adviser to buy the property in the first place??? It was for your own benefit??? – Clearly vulnerable inexperienced buyers are being told they have to see the agents adviser in order to proceed with a purchase.
I can only hope that we work hard to inform all our buyers what their options are…the fact you see an agents mortgage adviser or not should have no implications whether or not you have a higher chance of securing that property. 1) It is illegal to do so 2) they are clearly using you?
-The only thing more expensive than education is ignorance.
Z
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
A Lender requirement is that Homebuyers have building insurance in place on exchange of contracts. This causes a problem as Homebuyers either have to contact their own insurance company and see if they will insure two properties or they take out new insurance for 12 months. This can be costly as the Homebuyer hasn’t exchanged nor can they unless they have insurance in place.
Homebuyers can now get a Flexi Smart Contingency House insurance which provides building insurance between exchange and completion for up to 28 days.
The benefit is obvious, they can take this interim insurance out and then after exchange with time on their hands they can search the market for the best insurance.
We manage the Homebuyer Conveyancing panel and the take up for this supportive insurance is growing
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register