Home Insurance Guide
- Lowdown
When you buy a home and get a mortgage, you'll need insurance
to cover your payments and your home.
Here, we explain the ins and outs of each relevant type
and link you to the best providersr.
Please note that as with all financial "products" there
are many different names for what are essentially the same
thing. The following list refers to the most common terms.
Click on the links below to access the simple guide
to each subject.
Life
Insurance
Permanent
Health Insurance
Critical
Illness Insurance
Retirement
Cover
Mortgage
Life Insurance
Buildings
and Contents Insurance
Mortgage
Payment Protection Insurance
Mortgage
Protection Decreasing Term Assurance
Mortgage
Indemnity Insurance
About
Insurance Tie Ins
Top
tips
Buildings and Contents Insurance
You need to insure the building and your possesions.
Your mortgage lender will probably try to
get you to take their own policy. Most people used to take
these because life was tough enough without having to make
dozens of calls to find a cheaper option.
But the internet has changed all that. Shop
around and save yourself thousands by avoiding
tie
ins and bundling. This doesn't have to involve you trudging
through the phone book. You can have the market checked
for you by filling out a simple application form here and
save thousands of pounds.
Buildings and Contents BUYING
TIPS
Rebuilding costs are not the same
as the market value of your home. Often they're
less than half - for example they don't include the cost
of the land. You'll overpay if you get this wrong. But
if you underestimate it you're in big trouble.
Ask your insurer's advice about this. The
Association of British Insurers have a useful booklet
called "House rebuilding costs". Tel 020 7600 3333.
Don't get this wrong.
Don't underinsure
your contents and possesions. Even old furntiure etc will
be expensive to replace. Too many of us regret having miscalculated
when it comes to having to buy new things and finding how
much we should have insured for.
Go through each room and list
what you have. Be realistic about the replacement
costs.
For high value items, antiques
etc Get an independent evaluation.
Be wary of "blanket cover"
packages which some insurers offer. These are based on the
number of rooms. You may end up paying more than necessary.
Shop around for
better quotes than your lender's offering and you could
save thousands.
Basically as with all types of insurance:
don't underinsure, don't overinsure
and only get insurance that's relevant to your needs.
Want
a quote now?
Back to insurance guide
list or Main contents
Life / Mortgage Cover
There are two main types:
Mortgage Payment Protection
for if you lose your job/ become sick etc. It's also known
as Accident, Sickness and Unemployment. Read
more about this now
Mortgage Life Protection
basically insures your life to pay off your mortgage. It's
considered to be a cheaper form of cover than straightforward
life insurance. Read more about this now
To The Top
Mortgage Life Protection
aka Mortgage Protection
Decreasing Term Assurance
This is another type of life insurance. It
works by recognising that the main purpose of insuring your
life is to pay off your mortgage. Because what you owe decreases
with time (ie as you pay your mortgage off) so does the
amount of cover provided and so does the premium
you have to pay every month.
It's considered to be a cheaper form of cover
than straightforward life insurance.
Want
a quote now?
Back to insurance guide
list or Main contents
Mortgage Indemnity Insurance
You pay for this but it only protects
the lender if you can't pay back the loan. It's
often compulsory particularly if the loan
to value ratio is above 95% - which can hit first time
buyers hard.
Some mortgage
lenders charge it from an 80% loan
to value others don't charge it at all - though in these
cases it may be hidden and you are paying for it
through a higher interest rate.
It works like this: If you don't keep up your
mortgage payments and your house is repossessed and sold
for less than is still owed on the mortgage then the lender
is insured against that loss.
The nasty sting
to the tale is that the insurer may be able
to claim the loss from you many years later.
At the time of writing there was controversy that mortgage
lenders can chase debts up to 12 years old, unlike the
standard 6 years for the rest of UK businesses.
You'd think that if you've lost your home
because you didn't have the money they'd leave you alone.
It seems they will - until years later,
after you've picked yourself up, when they'll try and get
it from you with interest. Often
the insurer was the same as the mortgage lender which makes
things look even more unfair.
Mortgage Indemnity Insurance can
cost you anything up to �1000 to keep your
lender feeling safe. Most borrowers don't realise that it
doesn't protect them at all and a recent trend is that the
better mortgage
lenders are starting to drop it. Some however still
make it compulsory.
How to avoid paying Mortgage Indemnity
Insurance
Some mortgage lenders don't seem to charge
it - but are actually hiding it by making you pay a higher
interest rate or some kind of tie
in.
You could check at what level of loan
to value it kicks in and borrow just below
the threshold. E.g. if it starts at 95% you
take out a mortgage for 94.99% - a difference of only �10
on a �100,000 mortgage.
Back to insurance guide
list or Main contents
Getting an Insurance quote via here
We have located some reputable insurance brokers
who seem to offer the best deals. If you want a quote click
on any of the links below to go to their websites.
But remember to always get at least
three quotes when buying a financial product. In
other words don't just rely on the quotes they give you.
Make comparisons and go for the best one.
Have you checked the insurance
buying tips yet?
Read On
Life
Insurance
Permanent
Health Insurance
Critical
Illness Insurance
Retirement
Cover
Mortgage
Life Insurance
Buildings
and Contents Insurance
Mortgage
Payment Protection Insurance
Mortgage
Protection Decreasing Term Assurance
Mortgage
Indemnity Insurance
About
Insurance Tie Ins
Top
tips
|
