A large number of homeowners could be paying over the odds for their home insurance according to the latest research.
A third of homeowners have taken out insurance from their mortgage lender for ‘ease’ at the time of their house purchase rather than searching for the best deal, according to Compare the Market. When surveyed, 29% of respondents said that they felt it was the easiest option and 10% felt pressured into taking out the insurance policy in order to secure the mortgage. What’s more, 14% felt that they were required to use a specific insurance company by the lender and 15% of homeowners took out the insurance policy offered rather than trying to find a better deal.
Many mortgage companies cross-sell other products when you find a mortgage directly from a lender rather than using a mortgage broker, who could help you to find a cheaper and/or more suitable deal. Buying a home is a stressful event with many things to sort out including utilities, broadband, TV, removals etc. so many homeowners want to make the process of insurance as quick and simple as possible.
Buildings insurance covers the building itself should the home suffer damage, for example by flood or fire. Contents insurance helps cover the cost and damage of personal possessions and items such as TVs, laptops and furniture.
Although mortgage lenders offer these insurance policies, you should not feel obligated to take this out along with your mortgage. It’s essential that you find the deal that best suits your circumstances even if it means spending a bit more time to find the right policy. It’s worth remembering that some lenders have targets they have to meet and under no circumstances will you penalised for not taking out their policy. In fact, TSB and Nationwide have stated that they do not put their customers under any pressure to take out their home insurance policy and do not impose any financial penalty for arranging insurance elsewhere.
Many of the home insurance policies offered by lenders are also available via brokers, so it could be that your lender does offer the best policy. But by using a broker you’ll have peace of mind knowing that it’s the best and most affordable policy for you and your family in comparison to others that are available.
Talk to us at The Mortgage Hub – we can find the best insurance policy for your circumstances by searching the whole of the market.