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What insurance do you need with your mortgage?

It feels good when your mortgage application is approved and you’re closer to buying your new home.

Now’s the time to think about insurance – to protect the property you’ve worked so hard for.

Here, we look at the types of insurance you may want to consider when taking out a mortgage.  

Why insurance is important when buying a home

A property is likely to be the biggest purchase you’ll ever make. Having insurance can provide you with a safety net – and peace of mind – if things go wrong. 

Buildings insurance is especially important when you have a home to protect and a mortgage to pay. And it’s often a condition of the mortgage.

Depending on the type of insurance you take out, having insurance allows you to: 

  • pay for repairs, or to rebuild your home if it’s damaged
  • replace your belongings if lost, damaged or stolen
  • help pay your bills if you’re unable to work due to injury or illness
  • help financially support your loved ones if you pass away

Types of insurance to consider when taking out a mortgage

Buildings insurance

It’s not a legal requirement, but most mortgage lenders require you to have buildings insurance in place when you exchange contracts. This is when you legally own the property and are responsible for the building. 

Buildings insurance protects you against the cost of repairing or rebuilding your home from scratch, should it get damaged, so it’s important to consider getting the cover you need.

Buildings insurance typically covers: 

  • the structure of the building
  • permanent fixtures and fittings, such as kitchens and baths
  • outside buildings, such as garages and garden sheds

If you’re buying a leasehold house or flat, the property will still need buildings insurance but you may not need to arrange this yourself. The responsibility usually lies with the landlord who owns the freehold. But this isn’t always the case, so it’s important to ask your solicitor who is responsible for insuring the building. 

Explore home insurance

Contents insurance

As moving day approaches, you may want to consider contents insurance – to protect your belongings too. You shouldn’t underestimate how much your items are worth – from your TV to your washing machine. If you ever needed to replace them, you’ll need enough contents insurance to cover your losses. It may be cheaper to buy buildings and contents insurance together – but you can also purchase them separately.

Explore how much home insurance you may need

Life insurance

You don’t need life insurance to get a mortgage but if you have loved ones that depend on you financially, you may want to consider it. 

Life insurance can offer the comfort of knowing they can be taken care of, if you pass away. It may mean your mortgage can be paid off without having to leave this responsibility to your family, or risk them having to sell the property and move.  

The amount of life cover you’ll need will depend on the size of your mortgage and the type of mortgage you have. You may also want to factor in any other debts you may have, as well as money needed to care for dependants, such as a partner, children or elderly relatives. 

Explore life cover

Critical illness cover

Life insurance covers the worst-case scenario, but it’s also important to consider how you might pay your mortgage if you couldn’t work because of illness. Critical illness cover can help support you and your family if you unexpectedly fall ill. Insurance policies vary so it’s worth checking what illnesses are covered. 

Critical illness cover often includes things like: 

  • Cancer
  • Heart attacks
  • Strokes

Critical illness cover is usually offered as a lump sum payment on diagnosis of a specified illness. 

Having that money available can offer some reassurance during a difficult time. It can be used to clear your mortgage, pay towards rehabilitation costs or help you get back on your feet. 

Explore critical illness cover

Income protection insurance

Income protection offers financial support if you're unable to work due to an accident or injury. You don’t need it to get a mortgage, but it can provide a safety net if something was to happen. 

Income protection pays a monthly tax-free benefit to help cover your loss of earnings. It allows you to keep on top on your mortgage repayments, for example. So you can focus on your recovery without having to worry about money. 

If you’re employed, you may be entitled to Statutory Sick Pay (SSP) if you’re too ill to work. This is paid by your employer for up to 28 weeks. Some employers offer additional income protection as a benefit, but not all do. It could also be limited so it’s worth checking what your benefits include. If you’re self-employed or a freelancer, for example – income protection may be even more important.

Explore income cover

Keep in mind

  • All insurance policies are different so it’s important to regularly check what is and isn’t included, so you’re covered for the things you need.
  • Some lenders allow you to add extra cover to suit your needs. For example, we offer you a choice of different levels of protection for your home and contents.
  • Support is available. It can be tricky to know how much insurance cover you need. Our life insurance calculator can help you get started.