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Nyra Iyer
Contributor
Posts: 47
Registered: ‎03-06-2017

Is it mandatory to buy home insurance with a home loan?

Is it mandatory to buy home insurance with a home loan?

2 REPLIES 2
Yuvraj Nimje
Contributor
Posts: 29
Registered: ‎23-08-2017

Re: Is it mandatory to buy home insurance with a home loan?

No, it is not mandatory to buy home insurance with a home loan. But it has become a common practice for banks to insist on this policy to secure their collateral. Banks may also require that you get their name endorsed in the policy as a financier. Due to this endorsement, an insurer will insist on a no-objection certificate from the financing institution before settling a claim.

 

If you buy a home insurance, be mindful of two aspects. First, sum insured should be based only on the cost of reconstruction. Do not include the cost of land in the sum insured. Second, it is not necessary for you to buy the policy from your bank. There are several low-cost long-term plans that you can choose from. You can buy a plan elsewhere and still endorse your bank as a financing institution.

legalandfinance
Occasional Contributor
Posts: 6
Registered: ‎11-01-2018

Re: Is it mandatory to buy home insurance with a home loan?

No, itis not mandatory to buy home insurance with a home loan. 

In simple words, Home loan is something by which an individual can build his/her house which once they have dreamt of. It is a particular amount which is borrowed by individual for a fixed venture from banks or financial institution to buy, construct, repair or renovate a residential property. A fixed interest is also levied on such loans which has to be paid by the borrowers along with the principal amount.

Housing loan or home loan is very popular among people offered by various banks and NBFCs. It is even the largest selling banking product and one that ensures the longest banking relationship with the lender. Owning a home of your own is generally an obvious as well as a major decision in a person’s life. The expenses for the construction or purchase of property is quite high and this is where home loans play a major, almost indispensable role for majority of home buyers. Home or housing loans are advances made to borrowers who require funds to purchase houses/flats/land. They can also be availed of for construction, extension and renovation of houses. Lenders can be banking or non-banking financial institutions.