Home Buyers Protection Insurance
Buying a home can be an incredibly stressful experience. One of the biggest concerns for many home buyers, though, is the possibility that the purchase might fall through. One product can help protect you in that instance – Home Buyers Protection Insurance. It was designed to help cover the costs you may encounter if your purchase does fall through. How will you know, though, if this coverage is actually an expense you want to add to your already full plate? This quick guide can help.
What is Home Buyer Protection Insurance?
The goal of home buyers’ insurance like this is to protect you in the event that something happens as you’re trying to buy a home. Essentially, it’s insurance when buying a house that would help reimburse you if the deal falls through and you’ve already paid conveyancing fees, survey costs, valuation fees, and mortgage lender fees. Home-buying insurance can kick in to provide buyer protection if you get gazumped, too. If you’re unfamiliar with the term, gazumping happens before the exchange of contracts. It occurs when the seller accepts another offer, even though they accepted your offer. Homebuyers protection insurance, in this case, helps to cover those costs you’ve already laid out providing you a real protection cover to help ensure you don’t lose a lot of money in the process. House-buying insurance also helps if the seller changes his or her mind before the exchange of the contract. The goal here is to protect. It’s essentially insurance for a new homebuyer who can’t afford to walk away from some of the fees they pay if something happens before you reach the exchange of contracts.
Is There Any Real Risk of a Deal Falling Through?
Absolutely! Statistics indicate that nearly a third of all property purchases fall through before you make it to the exchange of contracts. Typically, it works like this. You find a beautiful house you love, and you make an offer that the seller accepts. Then, however, something happens. Maybe the seller decides they no longer want to sell the home. Maybe they take another offer and you get gazumped. It’s happened to nearly 31% of all homebuyers in the UK! Perhaps the mortgage lender’s valuation is a bit lower than the offer the seller accepted. Maybe your survey finds repair work to be necessary. It could also be that you decide to withdraw because you’ve had a change of heart or of circumstance. No matter what happens, it’s important to understand that it does happen, and when it does, you could be out quite a bit of cash as a result.
How Buyers Protection Insurance Can Help
If you find yourself in any of those situations, home buyer protection insurance can be incredibly helpful. For a fairly low fee, it will pay your conveyancing fees (often up to £750). It will also usually cover any survey and mortgage valuation fees of up to £500. In some cases, it will cover the mortgage arrangement and lender fees you’ve already paid, too. Usually, the house cover on that is up to £250. As previously mentioned, it offers gazumping protection, too, if the offer the seller accepted was £1000 more than yours was. Most of the homebuyer’s protection insurance policies last for quite some time, too. Usually, you can find a policy that will hold up for 120 days, though there are some that are a bit longer than that.
It’s important to note, though, that these are just standard home protection insurance policy covers. There are premium homebuyer insurance policies that offer you a bit more in terms of coverage for all of the concerns listed above. Some homebuyer’s insurance options will even cover things like accommodation and storage fees should you need them and mortgage broker fees.
It’s important to note that home protection policies for buyers often only kick in during certain situations. Typically that means the property owner has to withdraw the house from the market, or a local authority search comes back with an indication that the property is already part of a compulsory purchase order. In some cases, they’ll cover things if the valuation is less than 90% of what you’ve already offered or the mortgage lender adds a retention of more than 10% of the offer that’s already been accepted. Other things the mortgage lender does can qualify you to get the benefits of a home buyer insurance policy too. For example, if the mortgage lender requires rectification work, you may be able to claim the full value of your home buyer insurance. Additionally, if the property experiences damage that exceeds 10% of the property value while it’s covered, you should be able to claim those benefits. For example, if the house falls down or catches fire, you should be able to claim your insurance protection and get the money back that you’ve already paid. It may also help if you lose your job.
In most cases, you must be over the age of 18 to buy the average home insurance policy. Buyer insurance also only offers coverage when you use a solicitor or a licensed conveyancer to handle the conveyancing process. If you created the delay, you typically can’t claim the policy’s value either.
How to Get Home Buyer’s Protection Insurance
To find insurance when buying a house that will help to protect you, it’s typically best to start your search online. You’ll want to look for providers offering these kinds of policies with coverage amounts and benefits you’re interested in. Be sure to compare the different policies and their coverage limits carefully. Ask family members and friends if they’ve ever bought this type of insurance before, and figure out who they used to help protect their home purchase.
Be sure to look at home protection insurance reviews, too. They can help you better understand the customer service level each company you’re considering has to offer.
The Bottom Line
Homebuyers protection insurance can be incredibly helpful if you’re in the market for a home and things just don’t work out like they should have. Money can often be tight in these situations, and this kind of insurance may mean the difference between having to pay fees twice and keeping that money in your pocket. When it comes to home protection insurance, money-saving expert blogs always recommend this coverage, as it is the first to protect your pocketbook. Buy house insurance when you make your bid, as it means more than you can imagine.
What insurance do I need when buying a house?
The reality is that you don’t have to have any particular home buyer insurance policy for the home. You can protect the capital you’ve already used for various things, though, if you choose a policy that will cover those costs should the deal fall through. You can also get smaller versions of policies like this. Conveyancing insurance, for example, will ensure you don’t lose money on the conveyancing aspect if the deal falls through.
What are some companies that offer buyer protection insurance?
There are many big insurance names that offer this kind of policy. Look to Martin Lewis House Insurance, Surewise Storage Insurance, Home in One insurance, Vantage Fee Protect insurance, and Surewise. Login to any of these sites to get a better understanding of what they might have to offer in terms of homebuyer insurance to meet your needs.
Am I entitled to benefits if I own a house elsewhere?
Even if you’re buying an investment property, you can typically take advantage of an option like this, as it’s designed for those looking to buy a house, not just first-time buyers.
What’s the average cost of mortgage protection insurance like this?
The cost of this type of insurance is usually somewhere between £50 and £150, depending on the type of coverage you want and exactly how long you want the policy to last.
Are there any eligibility requirements?
Typically you need to either have not yet submitted a mortgage application to apply or to have submitted one within the past 14 days. The same is true for working with your solicitor. As long as you haven’t instructed them more than 14 days ago, you should still be able to take out this kind of policy. If, however, you’ve exceeded that deadline or you have already had a survey carried out, you usually cannot apply for this type of insurance.