Mortgages: Insuring with lender 'costs Britons £600m'

Homeowners with a mortgage are losing £600 million a year by taking out insurance from their mortgage provider, according to one insurer.

Research carried out by Post Office Financial Services showed that almost five million people could be losing money by blindly buying their insurance from the same place they get their mortgage instead of shopping around.

Almost half of all mortgage-holding homeowners admitted that they bought buildings, contents or life insurance from their lender with 63 per cent of them saying it was simply the most convenient.

Phil Ashkuri, head of insurance at Post Office financial services, said: "Convenient doesn’t always mean cheap. Many homeowners don’t realise taking out buildings and contents insurance with their mortgage lender is generally not the best value deal."

He also told the 12 per cent of respondents who thought buying insurance from their lender was compulsory and the four per cent who thought not doing so would put their mortgage at risk that buying insurance is not a condition on a mortgage.

A similar trend has been noted with travel insurance, with holidaymakers advised to buy their insurance from an independent broker instead of the company where they buy their travel arrangements.