Mortgage offer - special condition

ElsieMonkey

Received a mortgage offer today.

Reading through the mortgage illustration to check it's all as expected, and one of the 'Special Mortgage Conditions' says:

"The Security has been identified as being within a Flood Risk Area. Details of insurance cover acceptance in respect of this must be forwarded to the Society prior to completion and the Security will only be acceptable subject to any premium or excess loading in respect of flood risk being at not more than 100% or £1,000 respectively".

However, I checked the property location on the Environment Agency website, where it shows flood risk areas on a map. The property I'm buying is located in the middle of the road and is in a Low Risk area. However, the very bottom of the road only is in a High Risk area.

Is it likely the lender has made a mistake? Or are they being cautious and just lumping the whole road together? I'm going to ask our broker to query it with the lender on Monday. But just wondered does anyone have any experience or opinion of this?

Thank you!

Cakeguts

It is in a flood risk area. A low flood risk area is still a flood risk area.

e13

My parents' house is in an area deemed a high enough flood risk that they can only get insurance with their mortgage provider. The next door neighbour's family have lived in the same house for 100 years, and neither house has ever been flooded due to external water during that time.

So I wouldn't necessarily worry too much! But it is very area dependent. If it's not something you're concerned about, I guess hopefully you'll just be able to buy your house insurance and forget about it - like my parents have? Their road floods quite regularly, and we have to keep in touch with the council about keeping local waterways dredged, but those are really just features of living somewhere rural and low-ish lying.

eddddy

ElsieMonkey wrote: »

Is it likely the lender has made a mistake?

It kind of doesn't matter whether the lender has made a mistake.

They're just saying you need to make sure you get buildings insurance that covers flooding - on normal terms.

If you are correct, and the property is in a low risk area for flooding, you will have no problem getting insurance that covers flooding. So everything is fine. So just buy a policy, and send a copy of the policy to the lender.

I can't really see any need to contact the lender beforehand.


(Alternatively, if the lender is correct and you are mistaken, you will realise when insurers decline to quote or quote special terms.)
.

alchemist.1

Do you have to specifically declare to the insurer that you are in a flood area /certain distance from a river etc or do they have database based on addresses?

ElsieMonkey

Cakeguts wrote: »

It is in a flood risk area. A low flood risk area is still a flood risk area.

According to the Environment Agency, everyone is in a 'very low risk' area of flooding, apart from those deemed to be in a 'low', 'medium' or 'high' risk area.

So yes, the house is in a very low risk area, according to the environment agency. But this is not what the mortgage offer said, it stated the house is in a high risk area, and therefore we have to get buildings insurance that takes this into account. I guess this would be more expensive, which is why I thought it may be worth querying in case they have made a genuine mistake.

ElsieMonkey

I'm guessing they would have a database, much like the Environment Agency one?

ElsieMonkey

eddddy wrote: »

It kind of doesn't matter whether the lender has made a mistake.

They're just saying you need to make sure you get buildings insurance that covers flooding - on normal terms.

If you are correct, and the property is in a low risk area for flooding, you will have no problem getting insurance that covers flooding. So everything is fine. So just buy a policy, and send a copy of the policy to the lender.

I can't really see any need to contact the lender beforehand.


(Alternatively, if the lender is correct and you are mistaken, you will realise when insurers decline to quote or quote special terms.)
.

Thank you, this makes sense.

I think i was wondering whether to contact the lender to enquire why their assessment of the property location is different to the environment agency's, in case they have made a mistake? Because I'm presuming that building's insurance to cover what the mortgage lender has deemed a 'high risk area' would cost us more (and obviously i don't want to pay more insurance than i have to)?

But I have no experience of building's insurance because i live in a flat at the moment (this mortgage is for a house purchase). From what you're saying i'm guessing the insurance companies would make their own assessments based on their own data, and they may confirm what the environment agency says, that it's actually a low risk area. But that still leaves me having to get the level of cover that the lender as requested, in order to receive the mortgage? (I don't really understand what the level of cover is that they're are suggesting to be honest)! This is all new to me!

Thrugelmir

Why not get an insurance quote then decide how to proceed? Straight forward enough to do online. The only requirement is the mandatory excess is below a £1,000 from what you've quoted. .

ElsieMonkey

OMG! Lol. I think I'm losing the plot. I've just re-read what the mortgage offer said (I even typed it out in my thread post above for crying out loud)! And the offer states "The Security has been identified as being within a Flood Risk Area". For some reason I have been thinking it said "The Security has been identified as being within a HIGH Flood Risk Area", which is where my confusion stemmed from (because the property is located in a LOW risk flood area).

It's been a long (lost count) months of trying to sell my property, and a long story behind trying to buy the property in question... I think I need a break! Thanks to you all for taking the time to post though, think it probably sped up me realising my silly mistake, and they have been useful none the less as this is all new to me! :-D

eddddy

ElsieMonkey wrote: »

... But that still leaves me having to get the level of cover that the lender as requested, in order to receive the mortgage? (I don't really understand what the level of cover is that they're are suggesting to be honest)! This is all new to me!

Now I see what your misunderstanding is.

The lender is not asking you to get a special cover - it's completely the opposite.

The lender is saying that as long as the insurance co is happy to give you a 'normal' policy on 'normal' terms, the lender is happy.

But if the insurance co insist on 'special' terms or 'special' exclusions because of a flood risk, the lender isn't happy and won't give you a mortgage.


Edit to add...

So just enter the property details into the standard comparison sites. If they come back with quotes, they're probably on 'normal' terms.

If they decline to quote, or say something like 'please phone us for a quote' - they would probably want to impose 'special' terms / 'special' exclusions.