GoCompare Warns Of Dangers In Opting For Convenience Over Cost
Despite the convenience opting for an insurance product provided by their mortgage lender may give them, in doing so consumers could find they are unwittingly turning up the pressure on their finances.
Such is the claim of GoCompare where in a recent study it was revealed that a significant number of Britons are paying more money on their home insurance policy than they need to because they have opted to go with a deal offer by their mortgage provider. Research by the price comparison site reveals that more than a fifth of homeowners have purchased their current policy from the firm which lent their mortgages. Out of such consumers it was indicated that two-thirds did this because it was convenient, with about one in five (19 per cent) believing their insurance product provides value for money.
However it was stated that the ease homeowners think they are provided with “comes at a high price”. It was indicated that in opting for the policy offered by their lender consumers could find that they are paying out an additional 110 pounds every year in comparison to the lowest-priced deals on the market.
And following on from facing insurance costs which are higher than necessary it could be possible that homeowners encounter difficulties in managing other areas of their spending. This could see them develop problems in making repayments on loans and mortgages, credit cards and utility bills.
The study also showed a lack of understanding on the part of some consumers, with 12 per cent of respondents believing that they felt buying cover from their mortgage lender was compulsory or that they felt pressured into making such a purchase.
Commenting on the figures, Hayley Parsons, chief executive of GoCompare, said: “This is a worrying sign. We know that mortgage deals have been harder to secure of late but we really don’t want to go back to the bad old days when customers were often under pressure to buy the lender’s products to help secure the loan. There can be a danger of pressure selling when margins on the loan itself are so small, but customers need to know that they are under no obligation to buy buildings and contents cover from their lender.”
She went on to claim that as mortgage lenders often only offer insurance products from one company it is unlikely that the premium they offer will be the most competitive on the market. Ms Parsons advised that as prices continue to increase and people are looking to reduce expenditure on household bills, it is important to shop around for competitively-priced buildings and home contents insurance. Furthermore, it was stated that consumers should concentrate not only on the cost of a home insurance policy but also the amount of cover which it provides.
Whether a recent homebuyer or supplementing spending when carrying out property repairs, taking out a low rate loan might be effective for those looking for help with the costs of owning their own home. The additional monetary assistance that a loan provides could also help borrowers to purchase a comprehensive and cost-effective insurance policy. Such a loan might be of particular help to those looking to meet the cost of legal action following a dispute with their neighbours. In research carried out by the Association of British Insurers it was revealed that for those without sufficient levels of legal cover from their insurance provide the fees which are associated with dispute resolution can end up proving to be very costly.
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