Admin fee for going elsewhere for insurence?

DaisyClaire

Hope this is in the right bit as its sort of insurence and sort of mortgage!

We are in the process of buying our first home. The mortage company we are using have told us that if we are going to get our building insurence ourselves (ie: not though them) they will charge a £30 administration fee, which to me sounds more like a punishment fee!

Why do they do this?

I can't for the life of me think where they need to 'administrate' if our insurence is not with them?!?

Lorian

It is to pay for their time to make sure you have adequate insurance. If they do or not is up to them. Afterall if you have a mortgage secured on a property they have an interest that it can be adequately rebuild after fire etc.

You will find some insurance companies will pay you back the fee if you get a receipt and they offer to repay in their T&Cs.

dunstonh

I can't for the life of me think where they need to 'administrate' if our insurence is not with them?!?

They do own your property effectively so that is one good reason. Many lenders also like to be named as having a financial interest on the house insurance policy.

It is a bit of a penalty charge as most dont charge it any more but it is considered a valid charge and i recall from an old FOS publication that they will reject any complaint made about it.

DaisyClaire

I see. Ok, that makes sence I suppose.

Although.....the house we are buying is shared ownership to which we are buying a 50% share of a new build from a housing association - we have to pay a £24 a month service charge for the upkeep of the area etc, and have been told by the housing association that a percentage of the monthly service charge is for building insurence, so there is no need to get additional cover (and our FA has checked we have the right level of cover within this) so effectivly we now have to pay a £30 admin charge for the housing association choosing the building insurence - we don't really have a choice who insures it.