What insurance do I need when taking out a mortgage?

Congratulations, we know first-hand that it feels amazing when your mortgage application is approved and you’re closer to buying your new home. But now is the time that you need to consider insurance. You’ve worked so hard to get this far and arranging suitable insurance is important to help to protect your new property.

No need to stress, we’re here to help make this as easy as possible. So, here’s the different types of insurances to think about when taking out a mortgage.

Buildings insurance

Buildings insurance is one of the most important things to consider when you have a home to protect, and a mortgage to pay. Whilst it’s not a legal requirement, most mortgage lenders insist that you to have buildings insurance in place when you exchange contracts as a condition of the mortgage.

Depending on the type of insurance you opt for, buildings insurance will usually protect you against the cost of repairing or rebuilding your home from scratch, if it were to be damaged. It’s important to discuss and consider getting the cover that best suits your needs.

Buildings insurance typically covers:

• the structure of the building
• permanent fixtures and fittings, such as kitchens and baths
• outside buildings, such as garages and garden sheds

It’s worth noting that if you’re purchasing a leasehold house or flat, the property will still need buildings insurance, but you may not need to arrange this yourself. The responsibility for this usually lies with the landlord who owns the freehold. But it is always worth checking as this isn’t always the case, if you’re in doubt ask your solicitor.

Contents insurance

As your moving day approaches, it might be worth you considering contents insurance – to protect your belongings as well. Don’t underestimate how much your items are worth; from your TV to your washing machine, it can be quite costly to replace them should something happen to them during the move.

We advise that you take time to note down a list of your contents worth as in any unfortunate event with them it would mean that you’d need enough contents insurance to cover your losses. It’s worth searching around as it may be cheaper to buy buildings and contents insurance together – but you can also buy them separately. Our advisors can offer advice on both buildings and contents cover.

Life insurance

You don’t need to have life insurance to get a mortgage. However, it can be worth considering if you have loved ones who depend on you financially.

Having a life insurance policy arranged can offer you the comfort of knowing that your loved ones will be taken care of, in the unfortunate event that you pass away. We understand it is a horrible to think and talk about, but it can mean that your family won’t be left with the responsibility of paying off your mortgage or risk having to sell up and move.

It is worth discussing with your family and a Protection Advisor as the amount of life cover you’ll need will depend on the size of your mortgage and the type of mortgage you have.

Critical illness cover

Whilst life insurance covers you in the worst-case scenario, Critical illness cover can help support you and your family if you unexpectedly fall ill. This insurance type is not usually required to get a mortgage. But, think about it, would you be able to pay your mortgage if you couldn’t work because of an illness? Having that cover and money available can offer some reassurance during a difficult time. And it’s not just limited to helping you pay your mortgage; it can also be used to pay towards rehabilitation costs or simply help you get back on your feet.

Critical illness cover often includes things like:

• cancer
• heart attacks
• strokes

Critical illness cover is usually offered as a lump sum payment on diagnosis of a specified illness. It’s worth remembering that insurance policies vary so it’s worth checking what illnesses are covered.

To put some facts in to perspective – 1 in 2 people in the UK born after 1960 will be diagnosed with some form of cancer during their lifetime. Information provided by: www.cancerresearchuk.org

Income protection insurance

Income protection can offer you financial support if you can’t work because of an accident or injury; and help cover your loss of earnings. Again, you don’t need it to get a mortgage, but it can give you a safety net in case something were to happen; and it is especially important to consider if you are self-employed.

Want to know more about insurance policies?

Check out our free Insurance Guide for more information.

Don’t stress, you’re not alone and our support is available to you. We understand that it can be tricky to know how much insurance cover you need. Our team are here to help you, call us on 01634 968111 or send us an message.