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    “We know that time is precious for you, we can work around your availability while searching for the most competitive mortgage products and overseeing your mortgage application from start to finish”.

    Jonathan Smith – (CeMAP, BA Hons, Aff SWW, CeRER)

    What is home buyers protection insurance?

    This type of insurance allows you to claim back some of the initial costs paid for your home purchase in the event it falls through. These can include the valuation and survey fees, the mortgage lending costs and the conveyancing fees. The level of protection offered varies between insurance providers and the policy you choose so you may only recover some of the money you’ve paid out. However, as each of the fees can run into hundreds of pounds, this is a much better option than simply losing all of that money.

    Reasons for a purchase to fall through

    When you’ve had an offer accepted on a property and have paid the upfront fees in good faith, it would be nice to think that it’s just a matter of the formalities being finalised before you can collect the keys and move into your new home. Unfortunately, one in three property purchases collapse, turning your initial excitement into disappointment and stress should this happen to you. There are many reasons why your purchase may fall through and we’ve detailed some of them below.

    • Gazumping: This means that the seller has accepted a higher offer from another buyer, having previously accepted yours.
    • The seller withdraws the property from the market: This can be for any reason, including them simply changing their mind.
    • The property chain collapses: If you’re in a chain, delays at either end of it will affect everyone, whether buying or selling a property. This can lead to any of the parties withdrawing from their transactions, causing that part of the chain to collapse.
    • The lender withdraws their offer: There are a number of reasons why the lender may no longer wish to proceed with your mortgage offer. For example, the valuation may be too low or the survey may have flagged up some serious issues with the property.
    • Redundancy: You may have been made redundant and, therefore, cannot proceed with the purchase.

    What does home buyers protection insurance cover?

    Home buyers protection insurance provides cover when your purchase falls through due to events that are out of your control. We mentioned earlier that different levels of protection are offered, depending on the insurer and your policy. For example, you may be able to claim up to £250 for the mortgage arrangement and lender’s fees, up to £500 for the valuation and survey costs and up to £750 for the conveyancing fees with an insurer’s standard cover. If they offer a higher level of cover, this will allow you to claim back higher amounts. You don’t normally have to pay an excess when claiming with this type of insurance.

    Your home buyers protection insurance usually provides cover when:

    • You’re gazumped
    • The seller withdraws their property from the market
    • You are made redundant or relocated for your job
    • The seller is not legally entitled to sell the property to you
    • The local authority search highlights that the property is affected by a compulsory purchase order
    • The valuation is considerably less than the offer you’ve had accepted
    • The survey highlights significant issues with the property
    • The lender insists that rectification works are carried out before they release the mortgage funds — these works usually need to cost more than 10% of the offer price that has been accepted
    • The property becomes damaged after your cover has started and the repairs cost more than 10% of its value

    What isn’t covered with this insurance?

    Home buyers protection insurance doesn’t cover any of the costs you paid before your policy started. For example, if you were gazumped and then took out the insurance, your subsequent claim would be considered retrospective and, therefore, rejected by the insurer. You’re also only covered for issues that are outside of your control. For example, you can’t simply change your mind, withdraw from the sale and expect to be reimbursed for your expenses. Other reasons you’re not usually covered by your home buyers protection insurance policy are:

    • You intentionally cause delays and this results in the property transaction not completing
    • You take voluntary redundancy
    • You were aware that a survey had been carried out within the last 90 days and that the findings could lead to the purchase falling through

    When should you get home buyers protection insurance?

    It’s best to take out this insurance as soon as your offer has been accepted. There’s usually a set time frame within which you have to do this, such as within 7 days of submitting your mortgage application or instructing your solicitor to begin the conveyancing process. Aside from this time frame, your policy will be backdated to the offer acceptance date so there’s no advantage to delaying the purchase of your home buyers protection insurance.

    Our mortgage and protection brokers, located in Kent, London and Edinburgh, are ready to arrange your financial protection as soon as you need it. Just give us a call on 01322 907 000 to discuss the different levels of cover available as well as the policy inclusions and restrictions. If you prefer, send us an email at info@trinityfinance.co.uk or an enquiry via our contact form. One of our protection experts will reply to you as quickly as possible with more information about home buyers protection insurance and the other financial safeguards you can put in place when buying your home.

    How long does the cover last for?

    Generally, the cover lasts between 120 and 180 days, depending on your policy and the insurer. It’s important to note that home buyers protection insurance only covers you for the property you’re buying when you take out your policy. This means the cover cannot be transferred to another property if the original purchase falls through.

    How much does home buyers protection insurance cost?

    As different levels of cover are available, the cost of your home buyers protection insurance will depend on whether you prefer standard cover or a higher level of cover. The latter normally provides bigger payouts when you claim and may cover you for additional issues or expenses. Prices also vary between insurers but the cost of home buyers protection insurance is significantly lower than the amount you’d lose if you didn’t have it in place and your purchase fell through.

    Do you need home buyers protection insurance?

    Having home buyers protection insurance isn’t a legal requirement but it can help you recoup some of the upfront expenses paid if your property purchase unexpectedly falls through. These costs quickly mount up and without this insurance in place, you have no choice but to be out of pocket again when you go ahead with buying another property.

    You’ve probably already thought about your buildings insurance but this type of financial protection can often be overlooked. We mentioned earlier that one in three purchases falls through so, while it’s an unsettling figure, it highlights the risk of this happening to you. As buying a property is such an expensive process, why not minimise your monetary loss if something goes wrong?

    Can you benefit from this cover as a landlord?

    Home buyers protection insurance is suitable for landlords as well as homeowners. This means that if you’re purchasing a buy-to-let property for your investment portfolio, you can protect your finances and your profit margin in the event the purchase falls through.

    Does this insurance apply if you’re buying in Scotland?

    Whilst gazumping won’t affect you if you’re buying a property in Scotland, there are many other reasons why your purchase may fall through. Therefore, it’s still beneficial to have home buyers protection insurance in place when buying a home in Scotland.

    Cancelling your policy

    You can usually cancel your home buyers protection insurance policy within a specified time frame, such as 14 days, and receive a full refund. After this period, you can still cancel your cover but won’t be entitled to a refund.

    Protect your upfront expenses with home buyers protection insurance

    The initial fees you pay when buying a home, such as those for the valuation, survey, mortgage arrangement and conveyancing services, add up to a substantial amount. Remove some of the stress that comes with the purchase process by having a financial safeguard in place for these expenses.

    At Trinity Finance, our mortgage and protection experts are here to help you prepare for unexpected issues in the home-buying process and minimise your financial loss. Located throughout Kent, London and Edinburgh, they can swiftly arrange your home buyers protection insurance when you need it. Simply call us on 01322 907 000 when you’re ready to proceed and have peace of mind that you can recoup some of the initial costs paid if necessary. Alternatively, send your details to us by email at info@trinityfinance.co.uk or via the contact form. We’ll reply to you with more information about the financial protection options available when proceeding with a home purchase.

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