Insuring the land

Required Reading


  


Insuring the land


Since the land can't be destroyed, the site value will remain, and, by contrast to the Victorian house mentioned above, you might find, if you have bought a newly built house in an expensive area, that the insurance cover will be for less than the price you paid.

The building society insists that cover is index linked: the index that is used is the House Rebuilding Cost Index, prepared by the

Royal Institution of Chartered Surveyors (RICS). This index is recalculated each year; the RICS compile separate tables according to the age of the property and whether it's detached, a semi or terraced. Some examples are shown in Table 22.

Because the insurance is protecting the society's stake in your property as well as your own, they will continue to insure it even if you

fall behind with the payment of the insurance premium. In such a case, what they will do is to add the premium to your mortgage loan where it will attract interest and, if it remains unpaid, will have the effect of extending the mortgage term.

Cost

The average cost of insuring a property works out at between £11.25 and £11.50 per £11,000 of the sum insured.

This policy is normally taken out before you actually move into your home. The usual practice is for insurance to be arranged as soon as you exchange contracts, as from that point you are committed to buying the house and are therefore at risk.

This is one of the items that a solicitor would normally undertake for you.


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Insuring the property


Many home-owners are hardly aware that their property is insured: it is all done through the building society. A house-building insurance policy will normally cover loss or damage to the structure by disasters such as fire, explosion, storm, flood and burst pipes.

Such insurance is normally a condition of the loan, and the building society will usually choose the insurance company through whom it is arranged. You have the right, if you wish, to request another insurance company instead will normally be accepted by the lender as long is its terms are equally acceptable.

Insurance premiums are charged in two ways. Either they are added to your mortgage, so that you will pay one-twelfth of the premium every month along with your mortgage payments; or you . . .... see: Insuring the property


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    Even if you have no proof of income, poor credit rating or facing repossession of your home, we can normally say YES (even if the high street lenders have said NO)!

    Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. The overall cost for comparison is 7.9% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but our average fee is 2.36% of the loan value. We are authorised and regulated by the Financial Services Authority for regulated mortgage and non-investment insurance contracts.