Protecting your purchase
When it comes to buying your new home, insurance is just as important as the home itself. There are a number of types of insurance you’ll need to consider: building or home insurance, contents insurance and mortgage protection insurance to name a few.
Building or home insurance
Depending on the type of loan you’ve taken out, under your loan contract it may be compulsory for you to take out building or home insurance to safeguard the lender’s interest in the property. You should check your loan contract to see if it is a condition on your loan. Even if this is not mandatory, it is strongly advisable. Building or home insurance covers you for damages to your property or its fixtures. You should check the various levels of cover with your insurer and also refer to their terms and conditions for any inclusions and exclusions. Depending on your level of cover, you may be able to protect yourself for anything from fire and storm damage to burglary. Essentially, home insurance covers the cost of restoring your property to its present condition if it is damaged. Make sure you don’t underestimate these costs, as you may end up seriously out of pocket in the long run should disaster strike.
Contents insurance is designed to protect you in the case of loss or damage to your personal belongings and items in your home, such as whitegoods, clothing and furniture. While you may already have contents insurance, it’s a good idea to update it after a move into a new property – especially if you’ve decked out your new house with brand new furniture and appliances. You’ll usually have a choice between two types of contents insurance: a policy that replaces the old goods with new ones or you can opt for an indemnity policy, under which you’ll receive the depreciated value of what was damaged.
Mortgage protection insurance
Mortgage protection, while not mandatory for borrowers, can be an effective tool to help cover your mortgage should you find yourself unable to work through injury or are diagnosed with a serious illness. Typically mortgage protection insurance goes towards the cost of your mortgage repayments, providing you time to re-enter the workforce or focus on regaining your health.
Speak with your mortgage broker if you’d like more information on any of these types of insurance – in many cases they may be able to recommend a qualified adviser that can assist with your insurance needs.