An insurance that can often be overlooked but might be worth considering, if you’re buying a home is homebuyer insurance. But what does it cover? When should you get it? And is it worth it? Let’s dive in.
What does homebuyer insurance cover?
There are different types of insurance when buying a house. Homebuyer insurance also known as homebuyer protection insurance, was set up to offer an level of cover for homebuyers should their property transaction fall through.
Typically these costs relate to fees that have been paid for. But you can’t get back, such as conveyancing fees, mortgage arrangement fees, search fees or survey costs. Depending on what stage of the transaction things fall through, these can be quite significant costs.
The reasons a property deal might fall through can vary widely. Maybe the seller decides to take the property off the market. Or maybe something negative is flagged in the survey that makes you reconsider. Homebuyer insurance aims to ease the financial burden in these cases.
What does homebuyer insurance do?
Should a transaction fall through, for whatever reason having homebuyer insurance can soften the blow.
Policies will vary, but you could claim back a substantial sum. Helping you get back on your feet and restart your property search, without taking a huge financial hit.
When to get the insurance
It can be worth getting homebuyer insurance when you decide to a buy a property. So you have it in place as soon as you have an offer on a property accepted.
By getting it in place early means you’re covered from the beginning of the process. Be sure to read and be clear on the terms and conditions of the policy carefully. Policies vary and you don’t want to get caught out should certain scenarios occur that the insurance doesn’t cover.
The sooner you get this insurance, the more secure you’ll feel about the steps you’re taking and the money you’re spending in the homebuying process.
Is homebuyer insurance worth it?
This largely depends on your appetite to risk and the type and cost of a the insurance policy itself.
1 in 3 property transactions fall through in the UK. If you’re in a property chain, where multiple sales need to go through successfully for your transaction to complete, homebuyer insurance could be particularly useful.
Consider the costs you’ll incur throughout homebuying process. If losing that money would put you in a difficult financial position, homebuyer insurance could be well worth it for peace of mind.
On the flip side, if you’re confident your transaction will go through without a hitch, you might decide its not worth the expense.
A safety net for uncertain times
Homebuyer insurance can serve as a safety net, offering some financial security during a period uncertainty.
While we’d all like to think that once an offer is accepted, it’s only a matter of time before the keys are in our hands, the reality can be quite different.
It depends on your individual circumstances and appetite for risk. However, when you consider the volatility of property transactions and associated costs, having a backup plan might be worth it.
Buying a home is likely one of the biggest financial commitments you’ll make. So protecting yourself from potential hiccups might be a wise move.
Last Updated: October 9th, 2023