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Wayne Said:

(UK) What kinds of insurance legally have to be taken out when I take out a mortgage?

We Answered:

1. Your mortgage company will most likely insist on building (structure) insurance so that they will be protected should something happen to your home, such as would be in the case if a fire or flood took place.

2. Content insurance is highly advised so as to protect your home's contents should something happen, but that will likely not be a requirement of the mortgage company since they have no interest in your home's contents unless of course they also want you to pledge those contents as additional security for the mortgage, which while quite rarely, sometimes does happen in higher risk situations.

3. Some mortgage companies will recommend life insurance of some sort, while some will actually have a life-insurance policy built into the mortgage with themselves as the beneficiary should you die while there is still money owing on the property.

4, And finally, some mortgage companies will try and sell you on mortgage insurance, which is essentially insurance against you losing your job and not being able to pay your mortgage payments. As a general rule, this type of insurance is very expensive, and few actually opt for it, as there are so many disclaimers involved such as not paying out should you quit your job, or otherwise lose it through any fault of your own. In other words, you could pay a high premium to have this type of insurance, but then not be able to collect on it if something did actually happen.

I hope this helps. Good luck!