The purchase of real estate often involves obtaining a loan. In addition, it can be very advantageous to take out mortgage loan insurance. It guarantees the management of credit maturities in the face of the vagaries of life leading to a significant loss of income or even insolvency.
The advantages of mortgage loan insurance
Although not legally compulsory, borrower insurance has many advantages and is often considered essential to benefit from a loan, especially when buying real estate. The lending institution may require the borrower that the credit be associated with incapacity / invalidity / death insurance.
This insurance protects the bank but also the person who took out the loan. The borrower has the certainty of being able to repay his loan while the bank is assured of recovering the amount loaned. In addition, mortgage loan insurance increases the possibilities for the borrower to keep his property even after a sudden loss of income.
This mortgage loan insurance is also protection in the event of death or illness. It prevents the heirs from having to pay the debt. In addition to death, the guarantees covered by mortgage loan insurance are total and irreversible loss of autonomy, total temporary incapacity for work, permanent and total disability, partial permanent disability, loss of employment and unemployment.
The borrower benefits from guarantees throughout the duration of his loan. In the event of death, the insurance covers the amount of the remaining credit. When the borrower finds himself in a state of disability and unable to exercise his professional activity, the insurance also reimburses the amount of the remaining credit.
If a medical adviser from the insurance company declares that the borrower has a disability rate greater than or equal to 66%, the credit will be taken over by the insurance. However, this guarantee may be optional. If the degree of disability is between 33% and 66%, the Partial Permanent Disability cover is triggered. An optional guarantee allows the insurance to take care of the credit in the event of temporary incapacity for work. It begins on the 91st day of incapacity until recovery. Finally, the Loss of Employment guarantee covers part of the credit if the borrower loses his job, but only in the event of dismissal for employees on CDI. It is also an optional guarantee.
How to find the best mortgage insurance?
To subscribe to mortgage insurance, you must first complete a health questionnaire or make a declaration of health. In view of the elements provided, the insurance may refuse to grant mortgage insurance or increase its rates. The cost of this insurance represents between 5 to 15% of the total amount of the loan. The cost of insurance also depends on various factors such as age, profession, amount and length of credit. The lower the risks (good health, young person, on a permanent contract, etc.), the lower the cost of insurance will be. To choose the right mortgage insurance, you must take into account the guarantees and exclusions, the general and specific conditions of the contract as well as the cost of the insurance.
It is not compulsory to subscribe to loan insurance in the same banking establishment as your credit. The loan can be insured by an organization other than its bank. The Vousfinancer.com site provides various tips for finding the best mortgage insurance for your needs and lifestyle. Getting in touch with a broker facilitates this search. This professional compares insurance offers to offer the borrower the one that is most suited to his situation and that which meets the bank’s requirements.
It is also possible to use an online comparator. This tool allows you to easily view all available offers in just a few minutes and find the one that best suits your profile and budget. A comparator also helps to realize the savings made depending on the insurance chosen.
Since the entry into force of the Hamon law in 2015, it is possible to change mortgage insurance without fees or penalties during the first year of subscription. But, for this to be valid, the new borrower’s insurance must offer an equivalent level of guarantee. The change of insurance is also made possible at the time of renegotiation of the loan or during a repurchase of credit. After this period, mortgage loan insurance can be changed on each anniversary date, provided that a 2-month notice is given.
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