Certificate of currency - new lender wants to increase

In the process of refinancing atm. The new lender has asked for a certificate of currency (insurance policy) for an amount that is a lot more than what our home is currently insured for. (ok I admit we are probably a bit underinsured....)

They want the amount to be $444k (desktop valuation, so I guess based on size and area etc). We're happy to increase the amount to maybe $350k .... are we able to negotiate with them at all? *sigh ... didn't realize how much there is to refinancing

 

Name and shame. Which lender?

 

The valuer would have put a reinstatement value on it. You want the money you have to jump through their hoops. If the lender says your house is a pineapple on the floor of the ocean, you say "yes sir it is" otherwise you get no money.

 

Probably not negotiable.

 

I'm confused.

You want the bank to accept the valuation and give you the money based on this.

But you won't insure the item that the bank is financing at this value, and even you admit that you are underinsured.

And you want to negotiate that the value of your home is actually less than the desktop valuation?

Pay the insurance. It's a no-brainer.

 

Why would you deliberately under-insure?

 

Agree with Perp. For the few extra $$ pa it does not make sense.

 

It's worth noting that insuring your house for $500K does not cost anything like twice as much as insuring it for $250K; as Chilliblue says, you're not talking a lot of money.

Why? Because most claims are not for total loss; they're for a tree through the roof in a storm, or things like that, and those claims cost the same for a $500K property as a $250K property.

It's sensible to tend towards over- rather than under-insuring.

 

Agree with Perp - sounds like it makes sense to up the cover and pay a little bit more. The bank isn't going to negotiate on this anyway - so if you want to complete the refi you'll need to get it sorted.

Cheers

Jamie

 

Cheers peeps used an online calculator and it doesn't cost that much more, thought it was going to be double our insurance amount

 

Really common to see some particularly high insurance val req's (many cover more than the build component, but the entire value of the property), but in the end you have to follow the Golden Rules:

1. The Bank has the money
2. The Bank makes the rules
3. If you want the banks money you play by their rules