Why Do I Need Insurance When Buying a Home?
There’s a lot to worry about when buying a home, whether it’s your first time on the housing market or you’re a seasoned campaigner. One area that often gets put on the back burner is insurance. It’s something that we’re always happy to advise on and explain at Graham & Co.
Your home is probably going to be your most expensive purchase during your lifetime and it pays to protect yourself against potential future problems. There are several different insurance products out there and, while mostly not compulsory, they are worth considering.
Here we take a closer look at what you might like to arrange when buying a home.
Home or Buildings Insurance
The first thing you will certainly need to sort out is buildings insurance. This protects the infrastructure of your house and covers areas like the roof, walls, floors and, in some cases, fixtures and fittings such as bathrooms and kitchens.
If you are taking out a mortgage, you need to have buildings insurance as a bare minimum and it is a prerequisite of any agreement. You need to maintain adequate buildings cover throughout the life of your mortgage.
Even if you do not have a mortgage, it makes sense to have this insurance in place as a minimum. If you are purchasing a leasehold flat, you need to check that the owner of the property has buildings insurance in place.
Buildings insurance does not cover your contents or anything that is not considered part of the infrastructure of the property. Many companies nowadays, however, offer combined buildings and content policy at a cheaper rate than either as a standalone agreement.
Mortgage payment insurance is designed to protect you if, for example, you become ill or lose your job and are unable to meet your monthly outgoings. There are different levels of cover and the cost will vary depending on your age and the amount of your mortgage. The insurance company will usually pay out your monthly repayments for up to a period of two years.
A slightly different alternative to mortgage payment insurance is to protect your income as a whole where insurers will typically payout 50% of your salary if you are unable to work because of illness or have lost your job due to redundancy.
Another option to consider if you are buying a house is life insurance. What happens if you suddenly die and your family are left with trying to cope with the mortgage? Life insurance is designed to give your loved ones a lump sum in the event of your death, allowing them to meet expenses and pay off the mortgage.
Life insurance is not a prerequisite for getting a mortgage in the first place but is a popular choice with about half of house buyers. The relatively low cost means that you can cover yourself in the event of something happening to you and protect the family you leave behind.
It’s important to consider all the options for insurance when buying a home. While the bare minimum is getting buildings insurance if you have a mortgage, putting in extra safeguards, usually for a relatively small premium each month, can actually give you more certainty and peace of mind.
If you are currently looking for a property in Andover and Whitchurch, contact the team at Graham and Co today.