FTB - nearing completion, insurance question

Bossworld

Hi,

At the final stages of house buying, our solicitor has requested the deed signed and the deposit etc, but also wants

"Your buildings insurance details (showing the lenders interest noted on the policy)."

I've never had buildings insurance, have had contents insurance through HBOS for the last 3 years.

Can I even get insurance this early on, given that we don't want to move in until 25th May (although we're trying to get contracts exchanged ASAP)?

Also, would it just be standard documentation from the insurance provider or do I need something special (basically what does lenders interest mean)?

One other question if someone would be kind enough to answer. We're borrowing 105,000 (deposit 20,000). The solicitors 'financial statement' they've provided shows a mortgage advance of 104,965.00 - where's £35 gone?!

Cheers

BizzleBozzle

Last time I bought a house you had to have buildings insurance starting from the day you exchange. All you need to do is ring round insurers for quotes and have it start from the exchange date your solicitor has given you. You also let the insurer know who your mortgage is with so it's noted on the paperwork as obviously they have a charge on the property until you pay off the mortgage.

As for the 35 quid I don't know but it's probably a charge e.g. Transfer of funds charge. But check with your solicitor.

Hope this helps and I haven't misinformed! I'm sure someone will soon jump in if I've got it wrong!

kingstreet

You apply for your buildings insurance now, as it needs to start from exchange when you become legally obliged to buy the property. Tell them to hold cover until you notify them exchange has taken place.

Make sure you ask the insurer to note the lender's interest as mortgagee.

The insurer will, if asked, send a fax to the solicitor confirming they are holding cover ready for a commencement date and that the policy;-

- is index linked
- covers subsidence, heave and landslip with no more than £1k excess
- covers the usual risks
- is for at least the rebuild cost required in your mortgage valuation
- notes the lender's interest as mortgagee.

The £35 is the fee for transferring the money to your solicitor electronically on completion day. See your key facts illustration (S8) or mortgage offer.

betmunch

also if you are not moving in until may, and assuming that no one else will be living there, make sure that the insurer is happy with the house being unoccupied for that time

Bossworld

Many thanks to both of you. Figured it must be a CHAPS/BACS charge but suppose I was expecting the mortgage to be 105,000 with a charge of £35 on top of it.

Just to clarify, the date needs to be from the point of exchange of contracts, as you say in order to make sure that the property is covered as soon as we've committed to buy, rather than the actual completion date? If so, how do I determine the exchange date? :S

EDIT: To clarify the situation, we're renting a different flat at the moment, the vendor's daughter and husband live in the house at the moment, but have signed to vacate the property on completion date.

Many thanks

BizzleBozzle

Yes from exchange. The insurers will be used to this so you'll be able to let them know the date as soon as your solicitor notifies you of it.

sonastin

It is a grey area as to who is responsible for the insurance between exchange and completion: you are committed to purchase the property from exchange but the vendor is obliged to had it to you at completion in the same state as it was in on completion. So if it burns down between exchange and completion, you will be obliged to buy but they are obliged to sort out the burnt-out shell. The contract of sale goes someway towards identifying where the risk lies between exchange and completion but it could be a costly legal battle to sort it out. If you both have buildings insurance covering the property, the insurance companies can battle over who is responsible. If neither of you are insured because you each think the other is responsible, between you you probably wouldn't be able to afford to put it all right.

For the sake of the few £ that buildings insurance is going to cost you should make sure that you have it. Your lender will withdraw the mortgage offer if you don't have insurance from exchange and something happens to the property but you would still be contractually obliged to complete. This is why your solicitor is asking to see it before he commits you to the purchase.

If the person you speak to in the insurance call centre tells you that you can't insure something you don't own, they are wrong - persevere and speak to their supervisor. You have an insurable interest in the property and it is common as anything to need to insure from exchange.

Bossworld

Thank you, had to explain that one to the missus as she wasn't happy about paying for it at first - changed her mind when I pointed out the risks. Will give them all a ring tomorrow morning.

G_M

You can shop around online (the usual comparison sites). Just give your best guess for exchange date, and then select your preferred insurer.

Your solicitor will discuss the precice exchange date nearer the time. He should give you a ring or letter a week or so ahead to say "I expect to exchange next Friday" is that OK with you? Friday may/may not actually be Exchange day, (as things can change last minute), but you can then ring the insurer, give the quote reference number you've received, activate the insurance from Friday, and do all the stuff advised above (fax to solicitor etc...)

you could also send a copy of the quote you received way ahead when you first get it, just to show your solicitor you have it all in hand.

jimpix12

Forgive my ignorance but why is it necessary to take out the policy now? Seeing as one can sign up for B&C insurance on the internet and start the cover instantly...

G_M

spunko2010 wrote: »

Forgive my ignorance but why is it necessary to take out the policy now? Seeing as one can sign up for B&C insurance on the internet and start the cover instantly...

You don't. You need to show your solicitor in advance that insurance will be in place from Exchange. He has a duty to the mortgage lender (also his client) as well as to the buyer, to ensure insurance is under control. But actually starting the policy does not need to happen till Exchnge.