Home Buyers Protection Insurance: Do I Need it?
Estimated reading time 5 minutes
Selling or buying a property can be an expensive, time-consuming and stressful process. With inevitable delays and potentially rising costs, it can be hard to navigate without feeling like you’ve been through a bit of a battle. If you’ve been looking to sell your house fast and are ready to buy somewhere new, you might want to consider home buyers' protection insurance. While your sale with Bettermove won’t ever fall through, your purchase from a high street estate agent might, and having a home buyers' insurance policy in place will help you avoid wasting money should the unfortunate happen.
What is home buyers' protection insurance?
A home buyer’s protection insurance policy is a form of insurance that covers you for the loss of cash spent on buying a new home if it falls through. When you buy a home, you’ll have various fees to pay before the process is complete; however, the sale could still collapse. This policy helps protect you from this loss.
Why would a house sale fall through?
There are many reasons a house sale can fall through. Either party may pull out, or sometimes, you get gazumped. Gazumping is when the seller accepts a higher offer than yours, even though they have already accepted the offer you made.
Occasionally, the survey may discover something that makes you unsure whether to proceed, and other times, neither you nor the seller has any issues, but further down the chain, another transaction has fallen apart, leaving you unable to complete yours.
How much will home buyers’ protection insurance cost?
Home buyers’ protection insurance varies in cost as there are various levels of cover available. At the lower end of the scale, you can expect to pay around £70, but for the most comprehensive policies, the final bill can reach hundreds of pounds. It is best to obtain some quotes in advance and read the terms to see what is covered.
When do I buy home buyers’ protection insurance, and how long will it last?
You should look to get your home buyers' insurance in place once you have had an offer accepted on a property and within a week of instructing a solicitor to begin the conveyancing process. Once the policy is in place, it lasts for up to six months before it needs renewing.
What does home buyers’ protection insurance cover?
A home buyers’ protection insurance covers the cost of many things that could lead to your purchase falling through. This would include:
- Gazumping. This is where the seller agrees to a higher offer from someone else despite accepting yours.
- Seller backs out. If your seller changes their mind and you’ve already spent money on trying to buy the property, you’ll be covered.
- Chain collapsing. If a link in the chain breaks, you won’t be able to buy the property, even if you’ve spent cash on getting the process started. The policy will cover you.
- A bad survey. If the survey uncovers substantial issues, you have the right to pull out; your policy allows for this and will ensure your expenses are covered either fully or partially.
- Lower lender valuation. If your lender values the property at less than what you have agreed to pay, you may be offered a smaller mortgage, or even no mortgage at all.
What fees can you claim back with home buyers’ protection insurance?
The fees you’ll be able to claim back if your purchase falls through may include:
- Conveyancing fees
- Mortgage fees
- Survey fees
- Valuation fees
- Gazumping insurance costs
- Accommodation costs
- Storage costs
Each policy may have subtle differences regarding what fees you can claim back. Carefully check the policy before submitting a claim.
What doesn’t home buyers’ protection insurance cover?
Despite home buyers' insurance being fairly comprehensive, there are some instances where a policy will not cover you for costs you’ve already accrued. These may include:
- A sale falling through because of delays you have caused
- You decide you no longer want to buy
- The fees you have accrued are refundable
- You didn’t instruct a solicitor
- You have taken voluntary redundancy.
You also won't be covered if expenses were incurred before the policy was taken out.
Am I limited to how much I can claim on home buyers’ protection insurance?
Yes. Basic policies will often have specific limits for each type of expense. For example, you may be limited to claiming £750 of legal fees or mortgage fees of up to £250. More comprehensive policies allow you to claim more, and in some cases, cover the full expenditure.
Do I need home buyers’ protection insurance?
Home buyers’ protection insurance is not a legal requirement, so you can move through the property purchasing process without it. However, buying on the open market isn’t as seamless as selling with Bettermove, and it can come with disruptions and delays. With that in mind, a home buyers’ protection insurance policy can be extremely beneficial. Spending a small amount to protect yourself from losing thousands of pounds could be the ideal way to ensure your property plans aren’t derailed due to a lack of funds.
At Bettermove, we make it easy for you to sell your house fast, with no fees, no delays and no risk of a sudden chain break. We buy your home ourselves, or present it to a network of cash house buyers who snap it up within thirty days. You’ll receive funds in your account quickly, allowing you to buy a new home, support the family or enjoy retirement a little more. Why not call us today to see how we can sell your house with no fuss?
