We recommend taking out cover, but not necessarily the lender’s
From this FAQ, you'll have gathered that mortgage rates revolve around risk. Most of that risk is on the lender's part. How they perceive you and your situation reflects in the mortgage deal they offer.
But as the homeowner and mortgagee, you take on risk, too. You have a duty to protect the roof over your head. Your precious possessions under that roof need safeguarding, too.
The most common way people protect their physical assets is take out buildings insurance. Or building and contents insurance, as they often come wrapped up together. For things more precious, they take out illness or life cover.
Choosing the right policy
Your mortgage provider will offer you a policy when you complete. Don't write it off.
Many banks have protection arms within their group. By taking one of their mortgages, they may offer you a reduced premium.
But with comparison sites aplenty today, blindly taking their cover could cost you.
You may find a cheaper buildings (and contents) policy yourself with a simple search.
Some lenders may charge you a small fee if you don't take their cover. It's called a Freedom of Agency fee, but worth paying if their policy seems expensive.
If a lender does demand borrowers take out their cover, we don't use them. You will always have freedom of choice through our lenders!
Taking out the right level of cover is imperative. To ensure our clients have adequate insurance, we've created our own protection department. We thought it prudent to do so, so you should take cover seriously, too.
Thinking "it's not going to happen to me" is not an option, today, especially for contractors.
Like mortgages, many policies work on replacing 'salary'. If you have a limited company payment structure, what you get back won't replace your income.
Our recommendation: don't stop at buildings and contents
We strongly advise all contractors to take advice on insurance cover. It's not a ploy to get a few extra pounds from you. You've worked too hard to get where you are to lose it all to an accident or illness.
So, while you're thinking about building insurance, think about these questions, too:
- What if your industry, job or role disappears?
- What if HMRC drops a bomb on the way contractors work?
- How would your disposable income look if you had to go back to PAYE?
- How would you cope if illness debilitated your capacity to work?
- Or worse yet, how would your family cope if you died leaving mortgage (and other) debt?
Those questions aren't there to frighten you. They are genuine factors contractors should consider insuring against!
You can get a better idea of the cover we offer in our insurance guides section. Once you're thus informed, make note of everything you might want to protect. Then talk to a specialist about covering all your bases.