Insurance
'tie ins" / bundling
What
are they?
Aren't they illegal?
Possible
benefits of bundling What
are they? The
mortgage market is highly competitive. The lenders try to sell you their mortgages
with attractive cut-price interest rates. To
compensate for their "loss leaders" they'll try to sell you their insurance
policies. It
won't be accidental if buying their insurance seems to be part of the deal.
If they actually charged you a penalty fee if you insure elsewhere, this
would be a "tie in". Tied
in insurance policies are very unlikely to be the best buy, especially
if the interest rate on the mortgage looks like a bargain.
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Aren't
tie ins illegal? No
they're not. Despite a myth
doing the rounds that tie ins have been made illegal. It's not true.
If you need clarification on this issue call the Financial Services Authority
helpline on 0845 606 1234.
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Benefits
of tie ins / Bundling Sometimes
cheaper insurance policies may not give you the same level of cover as the more
expensive ones. It
might also be good to keep everything "under one roof". Some
lenders can help you avoid postcode discrimination by making all their insurance
"block policies". This
means everyone pays the same regardless of where they live. (To see if it's worth
it simply get a quote for your postcode and compare it.
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