Buying a home? Is a Home Buyers Protection Insurance policy worth arranging? (AD)

Picture the scene. You’ve just found your ideal home, things are going swimmingly and you’ve booked your removal company. You’ve packaged up your belongings, sing most paperwork on time and looking forward to the big move. Then comes a horrific survey finding, issues with the confusing legalities involved with the purchase and ultimately the process never proceeds to completion. This is where home buyers protection insurance comes in. But what is it and how does it work?

Home Buyers Protection Insurance – What does it cover?

First of all, we’re not financial advisors here at Savvy Dad HQ. It’s important to know that while policies may have similar features they often differ significantly in terms of the levels of cover they provide and the premiums they charge. Always consult a qualified financial advisor when considering how best to protect your family and finances. That being said, there are some typical features that you may expect to find in a good example of home buyers protection cover:

1. Legal fees – Coverage for any unexpected legal fees that are incurred as a result of the process of legally transferring ownership of land or property from one party to another, a.k.a ‘conveyancing’. Essentially, conveyancing is part is about looking for issues to prevent future costs and liability, so this might be the most likely area to expect extra costs.
2. Mortgage arrangement or advance fees – Not all mortgage offers follow the same model. Some can have multiple charges or fees from the lender. Some have low arrangement or application fees but levy a higher interest rate, while others can use higher arrangement fees to hook buyers in with a lower flagship interest rate. You can often choose to either pay these fees upfront or have them added to your final mortgage offer. One gives you increased liability, the other gives increased costs as you’ll pay interest on fees added to your mortgage (be wary of mortgage overpayment fees and ERCs).
3. Surveys or valuations – There’s a variety of levels of home surveys, each with increasing detail and chargeable costs. They can start at around £500 for a property under £249,000 with a basic survey and range up to £1,500 for the higher tiers on properties over £500,000. It’s worth noting the ‘valuations’ arranged by mortgage providers are not the same thing, despite occasionally using the terminology of a valuation ‘survey’. Independent valuations are also available at cost. New builds may need slightly different surveys, which are usually cheaper in nature.

Are home buyers protection insurance policies worth the cost?

Buying a home will most likely be the largest outlay of cash that many families in the UK make. Hand-in-hand with this giant purchase goes the potential for giant financial pitfalls and unexpected costs. This is why it is well worth considering looking into the potential security and peace of mind that a policy will grant. 

Putting aside the differences in costs (typically £50-£150) and excesses that you’ll experience when researching your own cover, most policies will protect you against costs related to gazumping (under-cut offers), non-legally entitled sellers, compulsory purchase orders and wayleaves, removal of property from the sale (pull-out), and changes in circumstances, including, but not limited to, redundancy and death within the parties involved in the purchase.

Whilst having home buyers protection insurance is not compulsory, with around 1 in 3 house purchases and home sales falling through, it might just be one of the wisest outlays you can put your funds into. 

A contemporary illustrative example of home buyers protection insurance cover

At the time of writing, and for illustrative purposes, visiting a provider like Rhino Home Protect will allow you to see the types of coverage included in both a basic plan (starting at £69) and premium property protection (£139). 

For example, their base cover includes the following:

• Conveyancing Fees up to £750
• Survey/Valuation Fees up to £500
• £250 Mortgage Lender Fees
• 120 days cover
• Gazumping protection (if the offer accepted is at least £1000 higher than yours)
• No excess
• VAT Included in all fees covered

While their Premium Property Protection offers:

• £1,500 Conveyancing Fees
• £750 Surveys & Valuations Fees
• £250 Mortgage Lender Fees
• 180 days cover
• £300 Accommodation & Storage
• £200 Mortgage Broker Fees
• Gazumping protection (if the offer accepted is at least £1000 higher than yours)
• No excess
• VAT Included in all fees covered

*Disclosure: This article is for entertainment and educational purposes only. I am not a financial advisor and you should always do your own research and consult a qualified financial advisor before making big decisions with your money as capital may be at risk. This post may contain links to external sites and affiliates, Savvy Dad accepts no responsibility for how you use these external sites and services (see Site Terms and Privacy Policy).