Hi,
After a 3 month long application process, our home loan refinance is approved and we are signing the agreement to switch over. The new lender has requested that we provide Certificate of currency of home insurance with them as First Mortgagee. We need this done before the settlement can take place. Now, my question is what is the risk here in making this change and who is at risk? What happens if the house burns down in the two weeks from us making this change and loan settling. I would assume our current lender will be at a loss and what if new lender refuses to settle and offer the loan.
Is this a common practice to request this? Is there a workaround? I feel a bit uncomfortable not sure if I need to… Any advice or experience appreciated. Thanks.
Zero risk.
You are the policy holder. They are just interested parties. If it burns down and you get a pay out in theory they will get paid out first if they are on the policy but then they'd rather you rebuild or if you run off they can legally get to you anyway. It isn't like some parts of America where you can collect the insurance, hand the keys back and don't have to pay the loan.