Certificate of Currency & Your Application

Applying for a home loan requires you to supply quite a bit of paperwork. If you are using a finance broker you will start to appreciate the benefit of being able to rely on their experience and support during this process.

All lenders request an up to date Certificate of Currency. It is not a term that is used everyday by home owners but essentially it is a certificate demonstrating that your property is insured.

If you need to obtain a certificate of currency this is available from your insurance provider.

What is a certificate of currency?

A certificate of currency represents a valid insurance policy, specifying the conditions of the insurance, including the policy type that you hold, the premium paid as well as the length of cover represented by the expiration date.

In my experience every lender has requested a certificate of currency so as to protect them in the event that your property is damaged by an unexpected event, such as theft or fire.

It’s important to realise that the certificate of currency is only valid on the day it is issued to your bank.

Why does the bank need it?

Home lenders hold a mortgage over a property as collateral (or security) for the loan.  Therefore, they ask borrowers to show evidence that the property is insured to safeguard themselves.

The lender will ask you to identify itself as the mortgagee or interested party in the insurance policy. This protects the lender from unexpected damage or loss to your property. If something happened to your property, and your property was not insured, then the bank could be at risk.

The certificate of currency is generally required as part of the loan settlement process.

How do I request one?

You can request a certificate of currency from your insurance provider by phoning them directly or by logging in to your personal online account. Otherwise, your insurance broker can request the certificate on your behalf.

Before requesting the certificate for your lender, make sure that your property is insured for the minimum period required by your lender and that the policy commences before the assigned settlement date.

If you’re unsure of the terms required for the certificate, check with your lender before contacting your insurance provider.

When do I need to provide one?

Lenders request a certificate of currency if the security you’re using for the home loan application is a house.

You do not need to offer a certificate of currency to your lender if you’re building a home; instead, you would put forward builder’s insurance (the bank will request the builder’s insurance before releasing the first instalment payment).

Additionally, lenders don’t need a certificate of currency for a unit or apartment, as the insurance is covered by strata.

Does it cost anything?

When you request a certificate of currency, insurance providers charge a nominal fee. This fee covers the cost associated with preparing the paperwork.

A certificate of currency may cost you approximately $45-$55.  I have yet to hear of someone who has paid.

What should be included in the certificate of currency?

The certificate of currency generally states that the insurance contract is effective up to a given date. It should include:

• Insured party details. It should identify the name/s and residential address of the insured party (the borrower).
• Limit to protection. It should specify the maximum amount that the policy covers.
• Policy details. It should include the insurance policy number and the date that the contract expires.
• Premium paid. It shows the amount of the premium that has been paid by the insured party, as well as the date and method of payment.

We are always one phone call away if you have any questions in relation to this.