Home Buyers Protection Insurance – all you need to know
A little-known type of insurance, Home Buyers’ Protection Insurance is designed to protect home buyers, and their money, throughout the buying process. The costs involved in buying a house go beyond the initial deposit required, and can very quickly mount up. There is always the worry about what happens if the purchase falls through after you’ve spent money on mortgage fees, a survey and a solicitors.
By putting Home Buyers Protection insurance in place, if things did you go wrong you will be about to retrieve some of the funds you have lost.
Purchasing a home is exciting but also stressful, and the costs can quickly add up. The average csot of buying a house is £30,27, including mortgages fees, conveyancing costs, surveying, removal and stamp duty. Around a third of property sales fall through before completion, 25% of sales fell through after a buyer failed to secure a mortgage and that gazumping played a part in 25% of failed sales.
These are the main reasons a sale falls through;
A Break in the Property Chain
The chain is a line of buyers and sellers linked as their property sales/purchase depend on each other. A delay can affect the whole chain and is a big reason sales to fall through.
Gazumping is when a seller accepts a buyer’s offer, and then accepts another, usually higher off, from another buyer. If a buyer is gazumped, they lost out on the property they wanted and this can even happen after spending out on mortgage and conveyancing fees and surveying costs. You can also take out gazumping insurance to protect you in this scenario.
Seller Changed Their Mind
Sometimes the seller can just changes their mind about selling the property and withdraws from the sale, leaving you bout of pocket and back to house hunting.
Issue Found in Survey
In the event a serious and costly concern is found during the property survey on the home, a buyer may pull out of the purchase causing the sale to collapse.
Difficulty Securing a Mortgage
If a prospective buyer is denied a mortgage, which can happen even if they have a Mortgage in Principle, the sale cannot go ahead unless they are able to purchase the property without a mortgage.
Home Buyers insurance is often around £50-100 and covers you for some of your conveyancing fees, survey and valuation costs and mortgage fees if the purchase falls through after you have paid out these expenses. You will also be covered for events such as being gazumped or the seller pulling out of the sale.
There are limits on how much you can claim back, for example, some insurance providers will cover conveyancing fees up to £750, mortgage fees up to £250 and survey or valuation fees up to £500.
You will not be covered for any costs paid before you take out the policy, or if you change your mind. It only covers you for things that are beyond your control.
GIven the huge expenses involved in buying a house, taking out Home Buyers Protection Insurace is a very sensible plan to offer you some peace of mind.