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What insurance do you need with your mortgage?

It’s not a legal requirement, but most mortgage lenders insist that 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.

Having insurance can give you a safety net – and peace of mind – if things go wrong. 

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

Do you need buildings insurance with your mortgage?

Buildings insurance is especially important when you have a home to protect and a mortgage to pay. It’s often required, as a condition of the mortgage. 

It protects you against the cost of repairing or rebuilding your home from scratch – if it ever got damaged from a fire, for example. 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.

Do you need contents insurance with your mortgage?

It’s not essential but 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’d need enough contents insurance to cover your losses. It may be cheaper to buy buildings and contents insurance together – but you can also buy them separately. We offer both buildings and contents cover.

Find out about how you could save money on your home insurance.

Do you need life insurance for a mortgage?

You don’t need life insurance to get a mortgage but if you have loved ones who 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 die. It may mean your family won't be left with the responsibility of paying off your mortgage or risk having to sell up 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. 

Do you need critical illness cover for a mortgage?

You don't have to buy a critical illness policy when you take out a mortgage, 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. 

If you’re looking to take critical illness cover for a repayment mortgage, you should speak to an adviser as we do not offer decreasing cover online.

Do you need income protection insurance for a mortgage?

This type of insurance offers financial support if you can't work because of an accident or injury. You don’t need it to get a mortgage, but it can give you a safety net in case 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. That way you can focus on your recovery without having to worry about money. 

If you’re employed, you may be entitled to Statutory Sick Pay if you’re too ill to work. Your employer pays this 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, income protection may be even more important.

Keep in mind

  1. All insurance policies are different – it’s important to regularly check what is and isn’t included, so you’re covered for the things you need.
  2. 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.
  3. Support is available. It can be tricky to know how much insurance cover you need. Our life insurance calculator can help you get started.