Buildings Insurance – Lender’s Interest

by Readers Question

13:04 PM, 10th March 2014
About 7 years ago

Buildings Insurance – Lender’s Interest

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Buildings Insurance – Lender’s Interest

Ever since I took out my buy to let mortgage, I have availed of the lender’s building’s insurance, but as it is very uncompetitive, I am in the process of cancelling it and taking a policy from a 3rd party insurer (at a savings of about 60%!).

The current lender is insisting on the following before it will cancel their existing policy:

1. Provide a copy of the new schedule (which they will review to consider it acceptable or not).
2. Want an index linked clause for re-building costs. The current estimated re-building cost is £82k but the new policy I am looking at has a threshold with a £400k re-building cap (but without an indexing cap).
3. Proof the insurer is a member of FCA (which is not a problem).
4. Confirmation that the lender’s interest has been noted.
5. They intend to charge an admin fee of £25 (which they have the cheek to suggest the new insurer might pay!).

I have never had a lender request the above before. Buildings Insurance - Lenders Interests

Is this common practice and can they insist upon it?

Lastly, can a lender charge an admin fee?

Thanks

Aiidan



Comments

Mark Alexander

13:10 PM, 10th March 2014
About 7 years ago

Hi Aiidan

Quite a few, but not all, of my lenders insist upon me providing them with the information noted in your readers questions article and charging a fee. Their right to do this is a condition of their mortgage. I suggest you read them and if there is no mention of it (which I doubt) only then may it be worth challenging your mortgage lender.

In answer to your questions therefore, I don't think what you are experiencing is particularly unusual.

It's good that you can save 60% though isn't it? 🙂

One point I would make though is that Property118 can GUARANTEE to beat the premium on any like for like landlords insurance quote - please see >>> http://www.property118.com/landlords-insurance-landlords-buying-group/

Therefore, you could save even more 😉
.

Neil Patterson

13:34 PM, 10th March 2014
About 7 years ago

Dear Aiiden,

I saw your question come in, but Mark beat me to it!

Every thing Mark says is quite correct.

The lender obviously wants you to think it is not worth changing your insurance as they will make money from it.

However if they try to make it really difficult for you just make an official complaint and they will probably be more cooperative as going to the ombudsman will cost them £500.

Mark Alexander

13:56 PM, 10th March 2014
About 7 years ago

Reply to the comment left by "Neil Patterson" at "10/03/2014 - 13:34":

ooo good point regarding the Financial Ombudsman Neil, I'd not considered that one.

I might try that on West Brom next time they write to me about my landlords insurance, just to be bloody awkward and as payback for the way they have treated me in respect of hiking their tracker rate margins.

Link explaing the process to make a complaint >>> http://www.financial-ombudsman.org.uk/consumer/complaints.htm
.


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