Question about insurance requirements for Mortgage

JellyBeanie

Hi guys,

Feel like a bit of a noob as I've never dealt with mortgages before. Will provide a bit of a back story as I have a feeling I may have more questions in the upcoming weeks.


I applied to buy my council property before the Right to Buy ended last year. Took a while with the backlog but got my valuation & offer in March. Have received official mortgage promise from Coventry BS, instructed my solicitor to accept the councils offer at the start of the week etc (so thats the stage I'm at just now). Council offer set cut off for acceptance as 15th may and cut off for completion as 10th july.

I've been told by my broker not to do anything which may affect my credit history. They have also said that getting quotes for insurance will affect my credit history. The mortgage obviously requires buildings & life/payment protection insurance to be in place but from what date? I've searched through the terms of all the paperwork I've received and it only tells me the minimum £ of cover required for buildings, not whether it needs to be in place on accepting the mortgage or before completion or some other date. Also, does obtaining quotes really affect my credit record?


Any tips/pointers welcome as its well and truly uncharted territory for me.

Its a repayment mortgage over 10 years fixed for 5 if that makes any difference.

dimbo61

Well it is normally once exchange has taken place ( which is often one week before completion )
However you are already living in the property so already have contents insurance ?
You could contact your existing insurance company for a quote for the buildings insurance if you know the rebuilding costs ?
They only do a credit search if you take out the insurance via a monthly repayment basis !
If you pay the whole amount in one go or on your credit card it is paid for the year or part of the year to match up with your contents insurance.
You have to have buildings and contents insurance in place so any Mortgage company will understand.
Getting Life assurance is a good idea to protect your family should you die.
Get it as cheaply as possible.
We used Cavendish online to find a well known assurance company to provide the cover at the best price .
Income replacement insurance is up to you if you want it ?
You can sort this once you have bought the property

JellyBeanie

Thanks for the reply. Thats what I thought, that insurance wouldn't impact my credit record unless credit was involved but the broker was adamant it would!

Contents is up for renewal next month so good suggestions, thanks.

The broker said I would need life/income protection insurance but the mortgage offer itself only lists buildings insurance as being required as a condition of the mortgage. But even if it isn't required, i suppose it would be a good idea to have it just in case the worst should happen!

Lilla_D

If you live in a flat, then the service charge would include the building insurance, so you don't have to obtain one separately. If you live in a house, then you'll need one from the day of exchange.

It will show up on your credit history that you had quotes and may even bring your score down, but don't worry, the lender won't care about it, as the credit search is for insurance, not for obtaining credit.

Life, critical illness and income protection are all recommended, as they are designed to help you and your family should something bad happen, but they are not compulsory and not a mortgage condition.

As with all insurances, yes, you wouldn't like to pay over the odds, but especially with critical illness and income protection, cheap normally equals useless. There are less variations with life insurance, but make sure you read the details, so you know what you sign up to.