What is compulsory insurance?

Compulsory insurance is where the lender insists that you buy their own house and contents cover as part of the mortgage deal. The DTI (Department of Trade and Industry) has criticised lenders for making compulsory insurance a condition of a mortgage offer.

As a result, some lenders have stopped this practice but others have got round it by quoting two interest rates: a headline rate if you take their insurance and a more expensive rate (usually about 0.25% higher) if you don't.

Charcol will always tell you if the lender you are looking at insists you buy buildings and contents insurance from them (and you can exclude such 'compulsory' products if you wish when you use our find a mortgage facility.