Imagine, for a moment, that you are all set to buy your dream home. You’ve found the perfect house, negotiated the price, and had your offer accepted. Out of nowhere though, the deal falls through. Perhaps the seller changed their mind about selling, or you are faced with an involuntary redundancy out of the blue. This is where Residential Abortive Transaction Insurance, more commonly known as Home Buyers Protection Insurance, can play a role.
Let’s take a look at what it is, how it could help you, and whether you actually need it.
What is Home Buyers Protection Insurance?
Residential Abortive Transaction Insurance, which is a bit of a mouthful, is also commonly known by the acronym, RATI, or also as home buyer protection insurance. Many homebuyers won’t know that it is available, and with all of the other costs involved in buying a home, to many it simply won’t be worth it.
However, for those who are willing to pay for it, RATI can be thought of as being a financial safety net for when your home purchase falls through. RATI helps to cover for costs which you have already forked out for and ensure that you aren’t left out of pocket.
Despite this, it must be taken out at the start of a transaction. Unsurprisingly, if your survey comes back with crumbling walls, it will then be too late to suddenly take out insurance.
Generally, RATI can help to cover around £1500 worth of cover towards conveyancing costs such as the following:
- Mortgage lender valuation fees
- Survey fees and searches
- Disbursements
- Conveyancing fees
- Mortgage lender arrangement fees
So, is it worth it?
With almost 65,000 property transactions falling through in the first quarter of 2024, RATI may be worth thinking about for property buyers. The majority of policies are around £50 or so, meaning that it is a relatively low amount for the financial blow that you could suffer if your purchase falls through.
Despite this, it is worth pointing out that RATI does not offer blanket protection for a failed transaction. In this way, it is similar to many other types of insurance. For example, it may cover you if the seller needs to pull out of the deal due to a serious illness, however it may not cover you if the seller suddenly changes their mind about selling. The terms of the policy will determine this.
As a result, whether you decide to purchase home buyers protection insurance comes down to whether you are prepared to pay for it, your personal situation, and whether you think you wish to protect yourself from the costs associated with purchasing a property. Before taking out an insurance policy for Residential Abortive Transaction Insurance, we would always advise you to ensure that you carefully read the terms and conditions to make sure you know what it is that you are buying.
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