Finance Editor, Kael Tripton Ltd - LBS MBA - Verified against FCA Handbook: 14 June 2026
Quick answer
MCOB 2.6A prohibits mortgage lenders from requiring you to use their buildings insurance as a condition of your mortgage. You have the right to arrange your own cover from any FCA-authorised insurer, provided it meets the lender's minimum requirements. Lenders cannot charge a fee for this.
Can Your Mortgage Lender Require You to Use Their Buildings Insurance?
Direct answer
Can my mortgage lender force me to use their buildings insurance?
No. MCOB 2.6A (handbook.fca.org.uk/handbook/MCOB/2/) prohibits lenders from requiring borrowers to use a specific insurer as a condition of the mortgage. As of June 2026, this applies to all FCA-regulated mortgage lenders in the UK. You have the right to arrange your own buildings insurance from any FCA-authorised insurer, provided the cover meets the lender's minimum requirements.
FCA Handbook - MCOB 2.6A.1 - Verbatim Rule Text Source: handbook.fca.org.uk
A mortgage lender must not make it a condition of a regulated mortgage contract that the customer must take out any insurance contract with a particular insurer, or use any particular insurance intermediary.
What Buildings Insurance Requirements Can Your Lender Legitimately Impose?
While lenders cannot dictate the insurer, they can set minimum requirements for the policy. These typically include: the property must be insured for the full reinstatement or rebuild cost (not market value); the policy must cover standard perils including fire, flood, storm, subsidence, escape of water, theft, malicious damage and impact; the sum insured must not be subject to an excess above a reasonable threshold (typically PS500 to PS1,000); and the lender must be noted as an interested party (mortgage interest note) on the policy.
The rebuild cost is not the same as the market value of the property. Most mortgage valuations include a rebuild cost assessment. You can also use the RICS rebuild cost calculator at bcis.co.uk.
How to Arrange Your Own Buildings Insurance: Step-by-Step
Check your mortgage offer for insurance conditions
Read section on buildings insurance in your mortgage offer. Note any minimum requirements (rebuild cost, perils covered, excess limits).
Get your own buildings insurance quote
Use the rebuild cost from your survey or mortgage valuation. Ensure cover meets the lender's minimum requirements.
Notify your lender in writing
Send the policy schedule to the lender's insurance team. Request written confirmation of acceptance within 14 days.
If lender charges a fee -- challenge it
Write citing MCOB 2.6A. State the fee is not permitted under FCA rules. If unresolved in 8 weeks, escalate to FOS.
Note the lender as an interested party
Ask your insurer to add a mortgage interest note (MIN) to the policy naming your lender. Most lenders require this.
| Requirement | Lender can impose? | Rule |
|---|---|---|
| Use specific insurer | No | MCOB 2.6A.1 |
| Minimum rebuild cost sum insured | Yes | Standard mortgage condition |
| Standard perils cover | Yes | Standard mortgage condition |
| Lender noted as interested party | Yes | Standard mortgage condition |
| Fee for using own insurer | No | MCOB 2.6A |
| Specific excess maximum | Yes, if reasonable | Standard mortgage condition |
Related KT guides
Frequently Asked Questions
Can my mortgage lender require me to use their buildings insurance?
No. MCOB 2.6A of the FCA Handbook prohibits mortgage lenders from requiring borrowers to purchase buildings insurance from the lender or from a specific insurer nominated by the lender, as a condition of the mortgage. This is sometimes called mortgage tie-in or insurance tie. You have the right to arrange your own buildings insurance from any FCA-authorised insurer, provided the cover meets the lender's minimum requirements (typically full rebuild cost, covering standard perils).
What buildings insurance requirements can a mortgage lender legitimately impose?
Under MCOB 2.6A, lenders can require that the property is insured to a minimum level -- typically the full reinstatement or rebuild cost as assessed by a surveyor. They can require the policy to cover standard perils (fire, flood, subsidence, theft, escape of water). They can require themselves to be noted as an interested party on the policy. They cannot require you to use a specific insurer or pay a fee for using an alternative insurer.
Can my lender charge me a fee if I use my own buildings insurance?
No. MCOB 2.6A prohibits lenders from charging fees or imposing penalties as a condition of allowing the borrower to arrange their own buildings insurance. If your lender charges an 'admin fee', 'insurance waiver fee' or similar when you switch to your own insurer, this is a breach of MCOB 2.6A and you can complain to the FOS.
What is an insurance-linked incentive and is it allowed?
An insurance-linked incentive is where a lender offers a discount on the mortgage rate or fee in exchange for the borrower taking the lender's buildings insurance. The FCA permits lenders to offer such incentives provided the incentive is clearly disclosed and the borrower is not forced to accept it. The key test is whether the borrower can still access the mortgage on reasonable terms without taking the lender's insurance.
How do I tell my mortgage lender I am using my own buildings insurance?
Write to your lender's insurance team enclosing your policy schedule showing the property address, sum insured (rebuild cost), cover start date, policy number and the insurer's name and FCA FRN. Request written confirmation that the lender accepts the policy. Keep this confirmation as evidence in case the lender later claims you have breached your mortgage conditions.
Primary sources
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