Building Insurance is a requirement before your loan can settle when buying a freestanding property.

All lenders will require a copy of the certificate of currency issued by the insurer, confirming the lender as an interested party on the document.

The reason for this is that the lender wants to ensure that if the property is ever destroyed due to a fire, flooding or another other acceptable reason, that it can be rebuilt, or the insurance will pay out the insurance policy at the time of claim.

When the insurer pays out the claim, they will ensure the interest party (the lender) will have the right to claim their funds before any money is paid to the owners. Essentially, paying out any outstanding loans before the owners get a hold of the money.

Building Insurance also protects you as the borrower, as you don’t want a loan on a property that has been destroyed, and you don’t have the funds to rebuild the property.

Many Australians don’t check the amount they are covered for is enough to rebuild their current property. Don’t let this be you.