A survey conducted by Go Compare Home Insurance has revealed that many consumers have misunderstandings about home insurance, and could end up losing thousands of pounds over the lifetime of their mortgage.
Go Compare said that although it was necessary to have sufficient buildings insurance to protect against loss, which typically includes flood, fire, storm damage and subsidence, it isn’t compulsory to purchase home insurance from the mortgage lender.
The survey results revealed that 14% of borrowers believed that a mortgage application may be more likely to be approved if they took out insurance with the lender, while 9% didn’t know that they could take insurance from another company.
Almost half of all borrowers had home insurance with the lender as it offered convenience. Of the people who had policies with their lender, 72% hadn’t carried out comparisons of prices or products among providers. In the same group of borrowers, 34% didn’t know whether their policy offered sufficient cover for their requirements.
According to a home insurance expert at Go Compare, Ben Wilson, many people believe that not taking out home insurance with the lender will make the mortgage invalid. He added that although it was a requirement to provide buildings insurance for a property which has a mortgage, the buyer could take the cover from any company they like.
A mortgage adviser takes CeMAP training so that they are able to provide advice on any aspect of a mortgage, which includes the best value home insurance.
