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Do I need Life Insurance when buying my first home?

Buying your first home is an exciting milestone. It might be your first taste of freedom as you fly the nest or you may be buying a house with your partner. You might have spent years saving hard whilst paying rent and you are finally ready to get yourself on the property ladder!

No matter your circumstances, being a first time buyer can be daunting. There are lots of things to organise and remember, and a lot of lessons to be learnt along the way.Amongst the exciting IKEA trips, sofa testing, paint samples and packing, there are also lots of “grown up” things to sort out.

Comparing electricity providers, taking meter readings, arranging broadband installation, switching over water bills and looking for home insurance are all on the to-do list.

There are also other types of insurance to consider. Researching home insurance and what buildings insurance covers is a major part of the buying process. Alongside the buildings and contents insurance, you also might want to consider life insurance.

A question a lot of people come to us with is ‘do I need life insurance when buying my first home?’

Many first time buyers have probably never considered taking out a life insurance policy before. A lot of people tend to wait for major life events such as buying a house to do so. People are also inclined to take out a life insurance policy when they have children or when they switch occupations.

We can help you find a policy that will give you peace of mind should the worst happen and leave you confident that a lump sum covers the cost of your mortgage payments.

In this blog post, we take a look at how to find your perfect policy with The Insurance Surgery. This month is going to be incredibly busy for house buyers, sellers, estate agents and removal men with the Stamp Duty holiday coming to an end. We can help you tick off life insurance from your to-do list today.

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The Stamp Duty Holiday

As the Stamp Duty Holiday deadline looms there has been a recent property frenzy over the last few months.

The temporary increase to the nil rate band for Stamp Duty Land Tax (SDLT), which is the rate before you start paying SDLT on residential property, has been extended by the government.

Rather than ending on 31 March 2021, the temporary nil rate band of £500,000 will be in place until 30 June 2021.

It is also worth noting that from 1 July 2021 to 30 September 2021, the nil rate band will be £250,000. The nil rate band will return to the standard amount of £125,000 on 1 October 2021.

This is great news for people purchasing a house before this time period.

What has this meant for property sales?

Latest research shows that 49% of all new properties listed for sale since the government announced the stamp duty holiday extension have sold within a month. This is according to new data published by Andrews Property Group.

This is more than double pre-Covid figures in 2020, where around 20% of properties listed with the group sold within 31 days.

The company reports that buyers have been quick to make offers since early March once the chancellor confirmed that the stamp duty holiday would be extended until the end of June.

Progressing quickly has meant buyers are getting their sales through before the deadline kicks in and ultimately saving a lot of money in the process.

Life Insurance When Buying A House

Using a mortgage broker when purchasing a property is something a lot of people tend to do. They can search the whole of the market on your behalf to find you the best mortgage company to go with. They can look at all your finances for you, work out how much you can lend based on your income and get you the best APR possible.

When you have your mortgage meeting and get a mortgage in principle, your mortgage broker may then offer to find you life insurance too.

Many people, particularly first time buyers, are under the impression from here that this means they have to take out a policy with their mortgage advisor. However, this is not the case.

You are more than within your rights to go away and find a policy that suits you and do your own research, rather than take out the policy that your mortgage advisor may be partnered with.

Life insurance is not obligatory, however we do highly recommend that you take out a policy when purchasing your first home.

Having a life insurance policy is especially important to have once you have a mortgage. If the worst were to happen and you passed away, your cover may pay off the remainder of your mortgage.

This ensures that no debt is left behind for your partner or family to sort out on top of funeral arrangements and living costs.

Finding your perfect policy

Contrary to popular belief, you do not need to take out life insurance in order to get a mortgage, although some Lenders may make this a condition of their mortgage offer, and many people choose to for a number of reasons.

The main reason is to ensure that their families are able to carry on paying the mortgage in the event of their death. If they are not able to do so, it could end in their family being forced to sell their home and move out.

Many mortgage advisors partner with major insurance companies to find you a policy. If your broker finds you a deal through the company they are partnered with, it is important to know that you are not under any obligation to take out the first mortgage policy that they find for you.

It is also worth doing your own research and searching the market yourself to ensure you are getting the best policy for the best price. At The Insurance Surgery, we partner with all the major insurance companies to find you the best policy for your personal circumstances. We do all the hard work for you so you do not have to get multiple quotes from multiple companies.

What to do if you’re declined elsewhere

If your mortgage advisor applies for life insurance on your behalf and it is rejected, we can help. 70% of people declined elsewhere get accepted through The Insurance Surgery.

Your applications may get rejected for a number of reasons. It could be due to a medical condition or it could be due to a high BMI. Certain job roles may also cause issues with an application, as well as if you partake in a hobby that is deemed as dangerous.

At The Insurance Surgery, we know which providers can cover specific medical conditions, hazardous occupations and dangerous hobbies. We can talk through your personal circumstances and find a policy to suit you and your lifestyle at a cost you are happy with.

Moving Day Ready

At The Insurance Surgery, you will have a dedicated advisor who will help you find your policy and give you free and impartial advice. Call us today on 0800 083 2829 or fill in our online quote form here and we can help get you ready for that next stage in your life!

The day you get the keys to your first home is exciting and stressful in equal measures – especially when you realise you have measured the room wrong and the sofa won’t fit (not based on any real life experiences…)

Let’s get life insurance ticked off your list in advance so that you’re ready for moving day!