Nearly one in five home owners believe that buying the lender’s home insurance will help their mortgage application go through, new research has found.
However one in three of them buying insurance direct for their lender did not shop around and could, as a result be paying more than double, says the study from Sainsbury’s Bank Home Insurance.
It found that buying home insurance from a mortgage lender is popular and overall 45% of home insurance customers opted for policies issued by their lender but the average buildings and contents policy from leading mortgage lenders can be as much as double the most competitive offer.
Customers buying direct from their lender pay an average £280 a year compared with the lowest premium of £137.
Analysis by insurance pricing experts Consumer Intelligence found the average premiums for the major mortgage lenders were 104% higher than the most competitive for buildings and contents, 147% higher for buildings only and 113% higher for contents only.
Many of those questioned who bought from their mortgage lender said the process was easier. Some 24% said they took the offer to save time while 18% thought it would increase their chances of a successful application.
This comes at a time when insurance is becoming more expensive with the study reporting that 79% of home insurance customers have seen their annual premium increase over the past three years with 21% saying prices have risen by more than 10%.
‘The home insurance market is very competitive so it’s always worth shopping around and comparing prices, particularly when premiums across the market continue to rise. It can make sense to take the deal on offer from your mortgage lender but only after taking the time to check whether it gives you all the cover you need and is truly competitive,’ said Karen Hogg, head of home insurance at Sainsbury’s Bank