Although some homeowners decided to shop around for a better deal, rather than take out home insurance with their lender, 18% were charged a fee for doing so
Many homeowners could be overpaying on their home insurance by buying a policy put forward by their mortgage lender rather than searching for the best deal, according to research by comparethemarket.com.
In a survey covering more than 2,000 homeowners, almost a third (30%) took out a home insurance policy through their mortgage provider at the time of purchase, instead of shopping around.
Nearly a third (29%) of homeowners said that their mortgage provider seemed the “easiest option” at the time.
Although some homeowners decided to shop around for a better deal, rather than take out home insurance with their lender, nearly one-fifth (18%) were penalised and charged a fee for doing so.
More than one in ten (13%) felt pressured into taking an insurance policy to secure the mortgage in the first place and 14% felt forced by the lender to take out insurance with a specific provider.
However, some homeowners (15%) admitted to simply accepting the policy showed to them without shopping around for alternative options available on the market and 10% said they didn’t know they could shop around.
Chris King, head of home insurance, at comparethemarket.com, said: Although cross-selling rarely means you’ll end up with the best deal, many home buyers still take out insurance with their mortgage provider even though cheaper deals can be found elsewhere.
Some consider it the path of ‘least resistance’, but others feel pressured into doing so. Buying a house is considered one of life’s most stressful and expensive events – and many homeowners are likely to choose the quickest and easiest route, King said.
He said: For those who go with their mortgage provider’s recommendation and then renew with the same provider year after year, they could be paying far more than they need to. As our data shows, shopping around online could save a household more than a hundred pounds.