Home Buyer Protection Insurance – Is it something I should consider?
Home Buyer Protection Insurance cover from just £60
Get Home Buyer Protection Insurance today
Buying a home is stressful enough without the financial worry of a sale falling through. Home Buyers' Protection Insurance helps cover legal, survey and mortgage lending costs should your purchase fall through.
What is Home Buyers’ Protection Insurance?
So you’ve found a home you want to buy and are ready to put in an offer. Then you start paying for solicitors, surveyors, mortgage advisers and other services to help you with you purchase. This soon adds up to thousands of pounds – a big investment that could be lost if the purchase falls through.
Home Buyers’ Protection Insurance can protect you in the event of being gazumped, or if the seller changes their mind. It’s proving to be a popular product in this time of corona uncertainty and for first time buyers.
What is the risk of a purchase falling through?
4 in 10 property purchases fall through
You find a house, make an offer that is accepted by the seller and then it’s yours, right? Buying sounds straightforward until you actually try and do it. Frustratingly, as many as 4 in 10 property purchases fall through (source: Property agents Quick Move Now put the annual fall through rate in 2020 at 42%.
Common reasons for a sale falling through include:
- The seller changes their mind and withdraws the property from sale
- Gazumping, 31% of UK homeowners have lost out on a property according MFS 2019 research
- The mortgage lender valuation is lower than the accepted offer
- The mortgage lender insists on rectification work
- The survey identifies necessary repair work
- The buyer withdraws due to a change in circumstance (such as job relocation or redundancy)
Key Benefits of HOA Home Buyers’ Protection Insurance
Cover costs £60 and provides:
- Conveyancing fees protection up to £750
- Survey and mortgage valuation fees protection up to £500
- Mortgage arrangement and lenders fees protection up to £250
- Gazumping protection if the offer accepted is at least £1000 higher than yours
- No excess
- Policy is valid for 120 days
Longer cover for 180 days is also available.
Home Buyer’s Protection Insurance cover applies in these circumstances:
- The property owner withdraws the house from the market
- Local authority search indicates the property is subject to a compulsory purchase order
- The property valuation is less than 90% of the accepted offer
- The mortgage lender applies a retention on the loan which is more than 10% of your accepted offer
- Ratification work is required by the mortgage lender
- The property is damaged during the period of cover and it costs more than 10% of the property value to repair
- Redundancy or relocation of full employment (unless redundancy is voluntary)
- The vendor is not legally entitled to the property
Restrictions to cover:
- Property in England, Wales or Northern Ireland and be a permanent construction; policy holder must be over 18 years of age
- The purchase of the property must not be subject to a contract race or sealed bids
- You must use a solicitor or licensed conveyancer to conduct the conveyancing of the property
- You cannot be reimbursed for costs incurred before the policy start date
- You knew that the house purchase would not complete before you bought HomeBuyer’s Protection
- You deliberately caused a delay which caused the house purchase not to complete
- You withdraw from the house purchase for reasons not covered by the policy (you can’t just change your mind for instance)
- You must not have had a survey carried out on the property before the policy start date
- You are aware of a previous survey having been carried out in respect of the property up to 90 days prior to the start date, that may give cause for the house purchase to fail
- Where you are able to obtain a refund on your fees
- In the case of redundancy, you took voluntary redundancy, are self-employed or a company director or partner of the company giving notice of redundancy
Get Home Buyers’ Protection Insurance with HomeOwners Alliance
Our Home Buyers’ Protection Insurance provides cover for conveyancing, mortgage and survey fees incurred by an insured purchaser when their purchase of a property falls through. The average claim amount in 2020 was £640 for those who took out Homebuyer Protection Insurance with Homeowners Alliance and needed to make a claim.
With many reasons causing a property purchase to fall through, no one likes being left to foot the bill for the wasted costs. By reimbursing these fees, a purchaser who has Home Buyer’s Protection Insurance is provided with peace of mind should the purchase not go ahead.
Frequently asked Questions (FAQs)
Is it too late if I have already submitted by mortgage application?
You can take out cover as long as the application was submitted less than 7 days ago.
What do you mean by mortgage application? I have an ‘agreement in principle’.
The mortgage application is the formal process of applying for the mortgage and can take a few weeks. An ‘agreement in principle’ can be issued by your lender within 24 hours and is helpful at the start of the process, when you are house hunting, as proof of funds.
I have already instructed my solicitor/ conveyancer, am I still eligible?
You can take out cover as long as the instruction to your solicitor was submitted less than 7 days ago. If you instructed your conveyancer before your offer was accepted, you are eligible for cover within 7 days of acceptance of the offer.
Can I take out cover if I already have had a survey carried out?
Will the policy cover a new build property? Yes
I’m buying a flat, can I take out cover? Yes
Will you cover a buy-to-let property? Yes
What about a property that is repossessed or I’m buying it at auction where I’m required to complete within 28 days? No – due to increased possibility of the purchase failing from the limited time constraints, the policy is not suitable.
Am I covered for the deposit I have to pay to secure the property? No
Can I transfer the cover to another property if the property I intend to buy falls through? No – the policy only covers the property that you are buying at the onset.