Homebuyers could be paying too much for insurance – Bright – Mortgages St Neots

Homebuyers have been warned that they may be paying more than they need to for home insurance after research revealed one in seven took out policies with their mortgage lender.

Bright Advice – Mortgages St Neots

The study, which was carried out by Gocompare.com, found that 14% of homeowners opted for that route. Almost half of those said that they did so out of convenience, while nearly three quarters had not compared other products and prices.

Ben Wilson, spokesman for Gocompare.com said: “Over the lifetime of a mortgage, failing to regularly shop around for a good deal on home insurance could cost thousands in lost savings,”

Protecting your property with adequate buildings insurance is a requirement made by mortgage lenders. Building insurance provides financial protection for the borrower, and ultimately the lender, from damage to the home. However, while most lenders offer home insurance, borrowers do not have to buy it from them.

Bright Advice – Mortgages St Neots

When those who had opted to buy their lenders home insurance were asked why, 14% of them stated that they thought it might help with their mortgages application and 9% didn’t realise they were able to buy cover elsewhere.

The survey found that 34% of homeowners who arranged cover though their lender said they did not check cover levels and excess to ensure that it was the correct cover to meet their needs and requirements.

On average, 3 in 10 people who took out home insurance with their mortgage lender said they believed that they had to arrange the cover through their lender and couldn’t look elsewhere.

mortgages st neots

Bright – Mortgages St Neots

Wilson went on to say: “A significant minority are essentially in a mortgage-linked insurance trap; believing that switching away from their lender’s insurance will invalidate their mortgage.

“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.”

Bright Advice – Mortgages St Neots 

Crucially, personalised advice from a trusted Insurance professional who specialises in this type of Insurance is key in ensuring you get what you pay for and what you pay for is what you need. Without turning to someone for advice, homebuyers can often feel stranded amongst the plethora of terms, conditions and options.

Get in touch with one of our trusted advisers at Bright Advice, a truly personalised service where we’ll take all of the hard work out of deciding what you need and why!

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Your home may be repossessed if you do not keep up repayments on your mortgage.