Buying a new home is about more than upsizing or moving to a better area – it’s about starting to invest more seriously in your family’s future. But before you start painting ceilings and hanging curtains, it’s essential to make sure that your new investment is covered for all eventualities.
Unless you’re lucky enough to pay cash for your home, which few people are ever able to do, you’ll probably need to take out a mortgage bond that is linked to the house. This means that until you’ve made your last repayment, the bank could reposses the property in the event of non-payment. Should something happen to you or your partner, such as a serious illness, disability or even death, that makes it impossible to make the home loan repayments, your family could end up losing their home.
To ensure this doesn’t happen, check the details of your life insurance policy and make sure it has disability, severe illness and income protection. In the event that something insurable happens, these benefits will help pay towards the balance of your outstanding bond.
If you have taken out a bond with a bank, it will insist that you take out short-term insurance to cover your house against accidental loss or damage caused by fire, theft or natural disasters like floods. This insurance only covers the structure of the house, which is what the bank has financed and has a vested interest in, and not the contents.
Including your household contents in your short-term insurance policy isn’t mandatory but it’s always a good idea. If you were to do a mental calculation of how much it would cost for you to replace all of your family’s possessions you’d probably be shocked at how quickly the value adds up. In the event of a fire, flood or robbery, it would be incredibly difficult to buy replacements out of pocket. Your Old Mutual financial adviser will be able to help you work out what level of cover you need.