Homeowners could save £110 by shopping around

Some homeowners have felt pressured to take home insurance from their lender, rather than shopping around, which could mean paying £110 more per year according to comparison site Gocompare.

New research from the site revealed 20% of homeowners bought their current home insurance from their mortgage lender. Of that number, 12% said they felt under pressure or believed it was necessary, while two thirds bought it because it was convenient. But this convenience can come at a high price, according to Gocompare’s research, which showed buying your lender’s policy can cost an extra £110 per year.

However, some homeowners still felt they got a reasonable deal from buying insurance alongside their mortgage. Of those who bought cover from their lender, 19% did so because they thought it was value for money.

Hayley Parsons, chief executive of Gocompare, said: “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.

“Mortgage lenders will generally provide insurance from one company, so it's unlikely that theirs will be the most competitive policy. Homeowners should shop around for both their building and contents insurance – the difference in premiums between insurers can be quite significant. However, it’s important to compare policies on the cover they provide, as well as the price.”