Do I Need Building Insurance Before Mortgage Completion?

You can see the finish line, the purchase of your new home is in sight, and then a solicitor asks: do you have building insurance for mortgage completion?

While securing building insurance can be a simple process, it’s often one of those small details that can have massive consequences, often catching homebuyers completely off guard.

Most lenders in the UK will require proof of building insurance before they agree to release any funds. This acts as a security measure for lenders and helps them offset any risk of damage to the property.

But when should you start the policy, and does it change if you’re buying a new build?

In this article, we take a deep dive into all things building insurance. From when you need to apply for buildings insurance, why it’s required, and how the right insurance policy can help keep both you and your lender covered from day one. Let’s begin.

Why Do I Need Buildings Insurance?

Lenders link building insurance and mortgage approvals closely, and In the UK, building insurance cover is usually a contractual requirement. This is because lenders want to know that their investment is legally protected from the moment that you own the property.   

How does building insurance protect the lender?

Well, from a practical stance, the property is what secures the loan and becomes the asset. As a result, lenders will want the asset they’ve invested in to have a safety net of protection, before releasing any funds.

To solve this problem, a building insurance policy can financially protect many aspects of your home, including: the structure itself, the roof, walls, floors, and permanent fittings. In addition, most building insurance policies will also protect your property against fire, flooding, storms, and any other unexpected or environmental events.

When arranging a building insurance policy, it’s crucial that the policy matches both yours and your chosen lender’s criteria. Just like life insurance or income insurance, a building insurance policy can be tailored to suit your circumstances, whether that’s a standard home, a new build, or a property with unique features.

It’s important to discuss your options, as different policies will vary in what they can cover. Some include higher cover levels, accidental damage protection, or specialised cover for periods when the home is unoccupied.

By aligning your insurance policy with everything you need, you can rest assured that your home is properly protected while also meeting your lender’s requirements.

When Do I Need Home Insurance?

When securing a mortgage in the UK, lenders will typically require you to have home insurance cover from the moment you become legally responsible for the property.

One of the most common questions our mortgage advisers get asked is: when do I need to get home or building insurance cover?

The key point to understand here is timing. To secure a mortgage, most lenders in the UK will require your insurance policy to begin as soon as you become legally bound to complete the purchase.

In most cases, this means your buildings insurance must start at the exchange of contract stage, not on the moving day.

Here’s a simple guide to help you see how and when your policy should come into effect:

As the table above highlights, once you exchange contracts, your own policy needs to start immediately, covering the property from that point onward. This ensures full protection through to completion and after you’ve moved in.

If you’re at all unsure on when to start your insurance cover, speaking to your solicitor or broker can help you confirm the correct date. Keeping your building insurance valid throughout is essential, as lenders usually make it a condition before mortgage funds can be released.

Do I Need Contents Insurance Before My Mortgage Completion?

No, it is generally not necessary to have contents insurance before your mortgage completion. The only insurance that is required by UK lenders is home (or building) insurance.

While buildings insurance covers the structure of your home, contents insurance protects what’s inside, from furniture and electronics to clothing and personal belongings, and is therefore deemed as an optional extra by most lenders.

As such, your focus should always first be on securing building insurance for mortgage approval, since your lender’s interest and risk assessment will be on the property itself.

However, once you’ve moved in – or are thinking ahead at the stage of securing your buildings insurance cover – adding contents insurance is usually strongly advised.

Whether you’re purchasing a buy-to-let for tenants or a traditional mortgage as a homeowner, contents insurance will provide you with peace of mind that any possessions in your property are protected against theft, fire, or accidental damage.

Many insurance policies can be tailored or combined to provide complete cover. Working with a trusted mortgage and insurance adviser – like Boon Brokers – can help you explore all of your options and can often combine two policies, such as home and contents insurance, under a single policy for simplicity and often better value.

Can I Choose My Own Buildings Insurance Provider in the UK?

While most UK lenders require you to have buildings insurance for a mortgage, you still have full freedom to choose your own buildings insurance provider. Crucially, your building insurance and mortgage don’t have to come from the same provider.

It is best practice to compare quotes from a wide-range of providers in order to find the best building insurance that matches your unique needs. Working with a trusted whole-of-market mortgage broker – like Boon Brokers – can help you find the best insurance options that match your situation.

To help you get an idea of what’s available, we’ve listed five of the most commonly used insurers in the UK:

Many homeowners prefer combining their building insurance policy with the add-ons that can align with your personal long-term plans, keeping everything under one policy.

Ultimately, while some lenders may recommend certain insurers, you’re not required to use them. What matters most is that your policy meets the lender’s requirements from the day contracts are exchanged.

What Happens If I Already Own a Home?

An important distinction to make is that building insurance is not a legal requirement in the UK. You will only need it if you’re taking out a mortgage, as lenders will generally require proof of home insurance, before releasing the agreed loan amount.

In short: Building insurance is a condition of your mortgage, not a legal obligation.

As a result, if you already own a property, home insurance is entirely optional. However, if you’re looking to purchase a new property with a mortgage, then building insurance will likely be required.

With that said, regardless of your circumstances, having home insurance is highly recommended to protect your property and belongings. As we’ve touched on before, a home insurance policy can help protect your property against risks like fire, flooding, and storm damage, giving you peace of mind and financial security.

Whether you own a property portfolio or are a first-time buyer, having tailored insurance policies can ensure that your home is financially protected. By working with Boon Brokers, you can explore all of your insurance options to decide  what coverage is most suitable for your situation, whether you’re buying with a mortgage or not.

What If the New Home is Empty Between Exchange and Completion?

No matter whether your new home will be empty or occupied, building insurance must be in place from the moment you exchange contracts, as this is when you become legally responsible for the property.

It’s important to note that when a property is unoccupied, standard policies may not automatically cover it. You should check that your policy:

• Covers empty periods for theft, vandalism, or accidental damage.
• Meets your lender’s requirements for mortgage approval.
• Includes specific provisions if the property is a new build, as some insurers have unique rules.
• Can be extended temporarily if you plan to move in some time after completion.

Most crucially, lenders still require proof of cover before releasing mortgage funds, so you’ll need a policy that protects the property from the moment you legally own it. This is particularly important for home insurance for a new build, as some insurers have specific rules for unoccupied properties.

Do Home Insurance Rules Differ for New-Build Homes?

If you’re buying a new-build property, then a question you need answers to is: Does home insurance for new homes work differently from older properties?

Answer: While the basic principles are the same, there are a few added considerations that are specific to new builds.

Most notably, new-build properties often come with warranties from the builder covering structural defects for a set period. While this has its own unique advantages, this cover does not typically replace building insurance for mortgage purposes. As such, a traditional building insurance policy will still be required at the stage of exchanging contracts.

Here are the key points to check for new-build insurance:

• Lender Requirements: Your mortgage lender may have specific conditions for new-build insurance.
• Full Rebuild Cost: Ensures the policy covers replacing the property in the event of major damage.
• Unoccupied Cover: Protects the property if you won’t move in immediately after completion.
• Construction Details: Insurers may request information about materials, design, or safety features.
• Builder Warranties: Offers extra protection for structural issues but does not replace insurance.

This checklist can help you ensure your building insurance meets both your chosen lender’s requirements while meeting your needs by fully protecting your new home.

Can a Mortgage Broker Help Me Get Buildings Insurance?

Making sure that your building insurance is both suitable for your mortgage and covers everything that you personally require, can quickly feel like a complicated series of events.

Fortunately, working with a trusted mortgage and insurance broker can make the process straightforward, saving you time and giving you complete confidence that your new home is fully protected.

At Boon Brokers, our dedicated mortgage experts take the time to understand your needs and financial situation. We can review both mortgage and insurance options across the whole market, explain the differences between policies, and highlight any specialist cover you might need.

Whether it’s essential cover or extra options for your specific needs, our fee-free, whole-of-market service can help you secure the right policy and make the process simple and stress-free.

Looking to secure your perfect home insurance to match your mortgage needs?

Contact Boon Brokers today and let our expert advisers guide you through every step of the process.