Mortgage Lenders handbook updated to reflect increasing use of online home insurance products
As of the 30th November 2015 the Council of Mortgage Lenders (CML) will bring in line its building insurance requirements to accommodate the nation’s increasing use of online home insurance products. As such there will no longer be any additional list of requirements that solicitors need to ensure compliance with.
When purchasing a property, home buyers are required to implement a buildings insurance policy in respect of the premises no later than completion. At Crane & Staples, we recommend that any such policies should be implemented upon exchange of contracts.
In order to protect the interests of a lender, Part 2 of the Council of Mortgage Lenders (CML) handbook makes specific reference to additional requirements that should be adhered to when an insurance policy is put in place in respect of a property to be purchased. Different lenders currently have varying requirements in addition to the standard CML requirements that are currently imposed under Part 1 of the CML handbook.
Only the provisions contained in part 1 of the CML handbook will remain which means that solicitors will need to continue to ensure that their clients are aware that:
- Buildings insurance must be in place in accordance with their mortgage conditions and any policy must commence no later than the date of completion.
- An insurance policy is maintained for the entire term of the mortgage.
The Law Society has welcomed the changes and suggested that this will bring the CML handbook in line with modern day practice of obtaining policies online and changing the building cover during the term of the mortgage. It is considered that the provisions contained in part 1 of the handbook should be sufficient and proportionate to any potential risk for the lender.
If you require assistance with a residential purchase then please do not hesitate to contact the Residential Property team on 01707 387071.