Do you need home insurance from exchange or completion?

In this brief guide we are going to answer the question “Do you need home insurance from exchange or completion?”.

Do you need home insurance from exchange or completion?

Yes, most mortgage lenders will insist that you have  home insurance before they will allow you to complete your mortgage. 

The reasons why most mortgage lenders will require you to have home insurance before exchange or completion is that from those points the property will contractually be owned by you and hence you will have the liability and be responsible if anything goes wrong with the property.

What may go wrong you say?

A fire, a burglary, natural disaster etc.

Once you exchange contracts on a property purchase you become legally liable for the property although you may not have completed on the property if you didn’t exchange and complete on the same day.

In some cases the exchange of contracts may require the seller to continue to maintain insurance on the property till the completion of the buyer’s mortgage on the property.

In some cases, you may be able to find short term insurance which covers youn between exchange and completion.

Most solicitors will also refuse to continue to represent a buyer who does not seek and obtain home insurance for their property at the point of exchange of contracts.

When to get building insurance when buying a house?

You should seek to get buildings insurance prior to exchanging contracts

Use a mortgage broker for your mortgage in principle

You may want to use an independent mortgage broker to help you get a mortgage on your new home.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.

This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle

This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.

It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.

Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.

They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.

This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.

In this brief guide we  answered the question “Do you need home insurance from exchange or completion?”.

If you have any questions or comments please let us know.

If you are in need of advice about your money and you live in the UK then you may contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.