It's now impossible to get a mortgage for a house by a river

chris9

This is madness! I am ready to exchange contracts but my broker can't find anyone who will insure the property because it's next to a river. The mortgage company won't release the funds without valid house insurance including flood risk. The current owners pay £341 per year and are fully insured. I contacted their insurers asking if the policy could be transferred into my name but they refused. They have also informed me they will not cover the property if I apply through them even though it has only flooded once in the last 30 years (previously in 2000). I will happily pay up to £1500 per year (5 times the current premium) just to make sure we don't lose this house.

What I fail to understand is that if insurance is supposed to be all about risk then why is there no option to just pay a lot more if they deem the property to be in a higher risk area rather than just refusing to offer any kind of deal whatsoever?

This means millions of houses will be un-sellable as nobody will be able to get a mortgage to buy them.

Am I missing something here?

HappyMJ

You could pay cash for it if it's that important to you then home insurance is not required. Highly recommended yes but not required to get a mortgage.

Lots of people can buy without a mortgage.

How you have worded your sentence "only flooded once in the last 30 years" doesn't really make sense. It flooded in 2000 which is once in 16 years. Did it also flood 31 years ago. That would be twice in 31 years. The flood risk therefore is one in 15 years. A very high risk and almost uninsurable.

I also live in a flood risk zone along with the millions of other you refer to. It's a 1 in 200 year flood risk. It can flood, it has flooded before the property was built and before flood defences were built, it could flood again but it is very unlikely. It however is an insurable risk.

dacouch

chris9 wrote: »

This is madness! I am ready to exchange contracts but my broker can't find anyone who will insure the property because it's next to a river. The mortgage company won't release the funds without valid house insurance including flood risk. The current owners pay £341 per year and are fully insured. I contacted their insurers asking if the policy could be transferred into my name but they refused. They have also informed me they will not cover the property if I apply through them even though it has only flooded once in the last 30 years (previously in 2000). I will happily pay up to £1500 per year (5 times the current premium) just to make sure we don't lose this house.

What I fail to understand is that if insurance is supposed to be all about risk then why is there no option to just pay a lot more if they deem the property to be in a higher risk area rather than just refusing to offer any kind of deal whatsoever?

This means millions of houses will be un-sellable as nobody will be able to get a mortgage to buy them.

Am I missing something here?

The current Insurers not being prepared to offer cover at any cost tells you something about the risk involved of a further flood.

Ask the mortgage provider to quote.

Speak to a local broker (Not Swintons) in the area you're buying the house as they will be aware of the risk and Insurers prepared to offer cover.

Try a specialist such as http://www.bureauinsure.com/

Try Aviva.

ariba10

I feel very sorry for the flood victims, as I did last time it happened., (and will again next time)

chris9

HappyMJ wrote: »

You could pay cash for it if it's that important to you then home insurance is not required. Highly recommended yes but not required to get a mortgage.

Lots of people can buy without a mortgage.

How you have worded your sentence "only flooded once in the last 30 years" doesn't really make sense. It flooded in 2000 which is once in 16 years. Did it also flood 31 years ago. That would be twice in 31 years. The flood risk therefore is one in 15 years. A very high risk and almost uninsurable.

I also live in a flood risk zone along with the millions of other you refer to. It's a 1 in 200 year flood risk. It can flood, it has flooded before the property was built and before flood defences were built, it could flood again but it is very unlikely. It however is an insurable risk.

Sorry (to clarify) - the current owners have lived there for 30 years and they have informed me that the house has only flooded once in that time. There is no information on whether it flooded previous to this.

I don't have an option to buy this house in cash which is why I need a mortgage. I realise that being unable to get house insurance does not stop people from buying houses for cash. My point is more about the majority of people who need a mortgage in order to make a purchase. If none of them can get flood cover then these properties are only sellable to people who are in a position to buy a house outright for cash (which excludes the majority of the market).

dacouch

chris9 wrote: »

Sorry (to clarify) - the current owners have lived there for 30 years and they have informed me that the house has only flooded once in that time. There is no information on whether it flooded previous to this.

I don't have an option to buy this house in cash which is why I need a mortgage. I realise that being unable to get house insurance does not stop people from buying houses for cash. My point is more about the majority of people who need a mortgage in order to make a purchase. If none of them can get flood cover then these properties are only sellable to people who are in a position to buy a house outright for cash (which excludes the majority of the market).

Which has an impact on the value of the house.

Have you tried renegotiating the price of the house now you've discovered the running costs will be a lot more.

losgiganteskid

I guess that even if the OP did renegotiate a price lower than already agreed that may not assist him/her with the insurance/mortgage dilema

chris9

Thanks for the help and advice so far. I just want to steer this thread back to the original question:

"What I fail to understand is that if insurance is supposed to be all about risk then why is there no option to just pay a lot more if they deem the property to be in a higher risk area rather than just refusing to offer any kind of deal whatsoever?"

Is there an expert on home insurance on this forum who can explain why the risk jumps from a reasonable £341 per year to simply "uninsurable"? Where is the middle ground? This way of doing business does not seem to follow basic logic. As I said before, I'm happy to pay a very high annual premium even if it's, say, 5 times higher than the current price. I don't believe the house is suddenly 5 times more likely to flood than it has been for the last 30 years. This would seem like a reasonable bet so why is there no market for it?

dacouch

chris9 wrote: »

Thanks for the help and advice so far. I just want to steer this thread back to the original question:

"What I fail to understand is that if insurance is supposed to be all about risk then why is there no option to just pay a lot more if they deem the property to be in a higher risk area rather than just refusing to offer any kind of deal whatsoever?"

Is there an expert on home insurance on this forum who can explain why the risk jumps from a reasonable £341 per year to simply "uninsurable"? Where is the middle ground? This way of doing business does not seem to follow basic logic. As I said before, I'm happy to pay a very high annual premium even if it's, say, 5 times higher than the current price. I don't believe the house is suddenly 5 times more likely to flood than it has been for the last 30 years. This would seem like a reasonable bet so why is there no market for it?

Without blowing my own trumpet, I know about Home Insurance.

I've given you the best advice in my first post on who to approach, once you've approached those markets you will know whether the House is insurable and at what cost.

The situation with the current owners Insurers is they have acted correctly and offered cover to the current owners at a reasonable price all the time they have requested it. Now the current owner is selling the house they're taking the opportunity to get the property off their books which reduces the risk to them and means the rest of their customers are no longer subsidising the risk.

They just do not want the business at any cost, they're a business and are perfectly entitled to do this as they owe you no loyalty.

Once you've approached the markets I've suggested, feel free to complain about Insurers not wanting to take on risk.

I would recommend you find out from your mortgage provider / solicitor what the maximum flood excess they are prepared to accept to avoid wasting your time.

[Deleted User]

chris9 wrote: »

Thanks for the help and advice so far. I just want to steer this thread back to the original question:

"What I fail to understand is that if insurance is supposed to be all about risk then why is there no option to just pay a lot more if they deem the property to be in a higher risk area rather than just refusing to offer any kind of deal whatsoever?"

Because risk is assessed by reference to the past. They know how likely they are to pay a claim by analysing what they've paid previously. So far so good, but if the climate is changing fast, past claims are no guide to future claims, and they no longer have any means of knowing the risk they're insuring. The insurance industry has probably had it's arm twisted into providing the existing occupants with special treatment which is not available to new owners who move in knowing that the climate is changing.

losgiganteskid

Your dilemma is going to be a major headache for the current owners who may not be able to sell no matter what the price of the property