Exchange and Insurance

Beans27

Hello knowledgeable people :wave:

Currently in the process of purchasing a property. The vendor has asked that we exchange in due course with up to 4 weeks between exchange and completion - hopefully exchange should be able to happen in the next week.

I know Buildings & Contents Insurance needs to be in place before the lender will release the funds - does the insurance need to be in place before we can exchange?

Being pushed by the mortgage broker to take their quote, but want to do a comparison first and haven't had time with moving out of the previous property and living out of boxes at the in laws!

Thanks for any advice.

Dan-Dan

Just search for buildings cover with your estimated exchange date as the commencement date and then add contents when you move in , but be aware the difference in price isn’t massive so might be easier to get the quote for them both , then go live at exchange

AndyT678

Do what Dan-Dan said.

Once you exchange you are committed to buying even if the house falls down so you need to have buildings cover in place from that point on.

Beans27

Thanks very much - didn't think of that, makes sense!! Will get on with the quotes this evening.

Realopinion

Beans27 wrote: »

I know Buildings & Contents Insurance needs to be in place before the lender will release the funds - does the insurance need to be in place before we can exchange?

Being pushed by the mortgage broker to take their quote, but want to do a comparison first and haven't had time with moving out of the previous property and living out of boxes at the in laws!

Thanks for any advice.

4 weeks from start to finish; I hope no corners are being cut because that is a fast time to complete the whole conveyancing process. Anyway, in response to your question, yes you must have Building's insurance in place before exchange of contracts otherwise your solicitor won't exchange. It is a requirement of the mortgage lender that you have this in place.

I am sure you can find the gazzillions of Insurance portals online so I won't plug any. The only advice I have was to make sure you have appropriate cover. It is great having insurance, but too many people go for the cheap and cheerful and when it comes to the worst, they are left short, covered for £1,000 when the works are in excess of £3 to £5k.

When getting an insurance quote from the mortgage broker you should always get 3 comparable. Do this for anything in life, car insurance, new windows, new Tv. Sure as anything by the final quote you'll be an informed buyer and get the right product. Oh, and make sure the insurance limits are the same for each of the products - no good comparing quotes that aren't like for like.

Are you also getting income protection insurance for if you or your partner lose your jobs? Definitely worth thinking about. It is the worst feeling losing a job, but when you then can't pay your mortgage, it is made even worse.

Just a thought.

kingstreet

Realopinion wrote: »

4 weeks from start to finish; I hope no corners are being cut because that is a fast time to complete the whole conveyancing process

Four weeks is the time between exchange and completion.

OP - there are companies which will accept an application from you prior to exchange with "TBA" as the commencement date.

They will provide confirmation that the cover is CML compliant to your solicitor. They will commence buildings cover just before you exchange and provide details of the cover to the solicitor and start the contents element when you complete.

Beans27

Realopinion, thanks for the concern, kingstreet is correct - four weeks between exchange and completion, our offer was accepted end of January, and we've had all the surveys done, Solicitor told us last week she has no problem with any of the searches and is making enquiries this week.

Will make sure I check like for like cover - when I got the quote from the brokers, it probably wasn't accurate as I didn't know half the details they wanted at that stage - only got the f&f form last week.

Income protection insurance.....to be honest, wasn't going to bother.....partner is self employed, and I believe he would not be covered in that case anyway? And if I was made redundant, hopefully I would get a new job quickly. If not, his salary would cover the mortgage and bills in the worst case.

kingstreet

The better income protection is known as permanent health insurance. It pays a tax-free monthly benefit if you are "unable to perform the essential duties of your own occupation" due to ill-health or disability, after an agreed waiting period.

This can run for the whole term of your mortgage, or until retirement.

The average "PHI" claim is about seven years, so this can ensure the bills and the mortgage are paid when you can't work.

It should be the first thing on any homebuyer's list of protection needs, but often is the last because it is not widely discussed by the nation as a whole.

Beans27

Thanks Kingstreet, never heard of that - I will look into this.

pinkteapot

OP - make sure you phone the insurer you plan to use and tell them that you're insuring from exchange and you won't occupy the property until X date (give them the date for completion).

We had a long time between exchange and completion - almost two months. I had trouble because some insurers refused to offer buildings cover when we wouldn't be occupying for such a long time.

My cheapest quote was Direct Line. When I phoned them to take out cover and mention the fact we wouldn't be living there yet, they declined cover because the maximum period between exchange and completion that they will accommodate is two weeks.

kingstreet

Beans27 wrote: »

Thanks Kingstreet, never heard of that - I will look into this.

Be careful of the cheaper alternatives to "own occupation" cover.

Things like "suited occupation" and "work tasks" can reduce the cost but also reduce the chances of a successful claim if you can hold a pen, use a keyboard etc.

Not a lot of use if you're a carpenter, for example.