Taking out a mortgage? Don’t forget the required insurance.
When you buy a house it’s important to find out which insurances are required, especially when you finance your house with a mortgage. Some insurances are compulsory, while others are just prudent. What should you look for when you take out an insurance against the risks associated with owning a home or investment property?
Buying and financing a house does come with some risks, and it’s only wise to insure yourself against the bigger ones like damage to your property or a sudden inability to continue paying your mortgage through death or disability. In this blog we’ll discuss the ins and outs of the main insurances you’ll need.
Insuring your house and its contents against risks
Your biggest financial risk is fire. If using your own fire extinguisher is enough to stop the fire, the financial consequences will mostly remain modest, but once you have to call the fire department you’ll be looking at tens of thousands of euros worth of damage. This figure includes not only the damage done by the fire itself, but also the water damage to both the house and its contents. The odds of a large fire are small, but when it happens the financial consequences are severe. If you rent out your property, the tenant should take out the contents insurance while the owner takes care of the property insurance.
Do consider the risk of disability
A disease or accident might lead to you no longer being able to work. When this happens employees will get a disability benefit called WIA, and people who are self-employed take out disability insurance. The WIA has quite a few downsides: It only covers the basics, and comes with a long list of requirements and limitations.
Disability insurance has its downsides too. It will only pay part of your former income, and it might take a long time before you receive your first payment. Another risk is that you’ll only get partial disability because the insurance company feels you can still work part-time. A home payment insurance can help you cover the gaps in the existing disability benefits.
Taking care of your dependents after your death
When you die your next of kin inherit your possessions and your debts. Mortgage payments can be quite high, and the likelihood exists that your dependents won’t be able to meet them. This is why, when you take out a mortgage, you are often required to take out a life insurance as well. At the moment of your death your dependents will receive a set amount of money which will help them to pay off the mortgage partially or in full. However, the minimum premium required by providers only covers mortgage payment, and so will not cover the actual living expenses of your dependents. Make sure that your receive the best possible advice in this matter.
Keep your future plans in mind when taking out a mortgage
Often when taking out a mortgage, decisions are based on what your life looks like at that specific point in time. However, it might be a better idea to base your mortgage choices on your plans for the future. Maybe you want to retire early, or sell your house again after a few years. Mortgages can be adapted to exactly these kinds of plans, and choosing the right mortgage provider can make a big difference in your ability to make your future plans come true.
We can tell you which insurances are required and which ones are simply a good idea for your specific situation. And if you want to know whether your mortgage is still the best fit for your future plans, we are happy to provide you with customized mortgage advice to suit all your needs and wishes.
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