Home loan insurance, freedom for the borrower

The field of mortgage loan insurance has been largely modified after the LAGARDE law of 2010. Since the latter, it is possible to delegate insurance in order to give more freedom to borrowers. Several laws then arrived to supplement the law of 2010. Today, it is possible to change from the first year its mortgage insurance. This is a considerable advantage for new owners.

But then, how does this procedure work in practice?

Presentation of the borrower insurance delegation

The LAGARDE law establishes a new freedom for owners: having the possibility of freely choosing their insurer for mortgage insurance. In this context, several players in the insurance brokerage market stand out, notably like Magnolia, which act as facilitators to access the best deals. At the same time, in reaction to this law, banks are increasing their prices to slow down borrowers in their freedom.

Two new laws are necessary to allow the proper functioning of this freedom:

  • The HAMON law of March 17, 2014: borrowers can now change borrower insurance within 12 months of signing the contract at any time.
  • The SAPIN law of February 22, 2017: borrowers can terminate their home loan insurance annually on each anniversary date of the contract.

Thanks to these successive modifications, the new owners are beginning to act to bring competition into play by changing insurers… However, efforts must be maintained. Banks remain silent to inform their customers of this possibility. Borrowers are therefore not systematically informed of this right.

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Concretely, you have the possibility as a borrower to choose another mortgage insurance provided you show the same guarantees to the bank. Indeed, for your insurance delegation to be accepted by your initial insurer, your new insurer must present identical guarantees. If this is the case, your former subscriber cannot refuse you the transfer. You can then make nice savings on the total amount of your mortgage.

Advice: if you need to, it is recommended to call on a mortgage loan insurance broker to obtain the best offer and above all the one most suited to your profile. Magazine-assurance.fr explains why it is advantageous to use a specialized broker.

Also Read: How Much Does Home Loan Insurance Cost?

The advantages of a new mortgage loan insurance

Concretely, the borrowers are winners. They can succeed in reducing the total cost of their credit by optimizing the amount of their mortgage loan insurance. With this freedom, you gain purchasing power. Your contributions can be reduced by 30% by changing borrower insurance.

In addition, if your personal situation changes, you can also obtain guarantees more suited to your new way of life. A new job or a new personal situation may lead you to modify your mortgage loan insurance contract. Think about it!

It is therefore a considerable advantage that should not be overlooked when taking out a mortgage. Do not hesitate to inquire, even if your bank does not detail the procedure to follow to change borrower insurance.

Advice: check before proceeding to a delegation of insurance your deadlines so as not to have to wait for the next anniversary date of your contract to proceed with the change of your insurance. The service-public.fr website gives you useful information to make your change.

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Read also: What are the steps to change borrower insurance?

How to proceed to exercise his delegation of insurance?

To obtain validation of your new mortgage credit insurance, your guarantees must be equivalent.

Thus, your insurer checks several points:

  • The type of compensation (total or partial compensation)
  • The risks covered and those excluded from borrower insurance
  • The assessment of the incapacity for work by your new insurer

When choosing your new mortgage credit insurance, you have to combine advantageous rates and support adapted to your profile. The first thing to do is to check for yourself if your new offer covers the guarantees presented in your current mortgage insurance.

Then, you must send by registered letter with acknowledgment of receipt, your substitution request and your borrower insurance offer to your bank. It then has 10 days to respond to you. If her answer is positive, she sends you an amendment to your loan contract for free.

This technique is therefore particularly interesting if you are a homeowner with a mortgage.

Read also: How to change borrower insurance?

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