This is a relatively unknown element, the insurance linked to the mortgage is nevertheless a crucial point for your financing.
Borrowing returns on all the elements to be taken into account before signing its borrower insurance contract.
Is home loan insurance compulsory?
The answer is “no… but”. Home loan insurance is not strictly speaking compulsory. However, your bank will refuse to finance you without this insurance.
The principle of mortgage insurance is to protect the borrower and the funds. In the event of a life accident (death, unemployment, etc.), the monthly payments or the remaining amount due will be paid by the insurer within the limits of the contract (coverage rate, exclusion of guarantees, principle of compensation, etc.).
Can you take out insurance other than that offered by your bank?
Yes, it is quite possible to choose another insurance for your loan than that offered by the bank. The only obligation to respect is to choose an insurance offering the same guarantees as the bank’s contract. That is to say an insurance which offers at least the same level of cover.
Which guarantees to subscribe?
It all depends on your borrower profile and your project. For a rental investment, all guarantees are not necessary. For the financing of a principal residence, on the contrary, it is better to choose a good cover.
There are several guarantees, whether or not provided for in your home loan insurance contract: the death guarantee, the total and irreversible loss of autonomy guarantee, the total or partial temporary incapacity guarantee, the total or partial permanent disability, the loss guarantee. of employment, etc.
How to change home loan insurance?
It is possible to change mortgage insurance after taking out one. Since 2014, with the application of the Hamon law, borrowers can change insurance up to 1 year after signing the contract. Two conditions to be respected: the equivalence of guarantees and a notice period of 15 days max before the anniversary date of the contract.
Also new in 2017, all home loan insurance contracts can be terminated annually from January 1, 2018. The objective being to be able to make savings on the total cost of the insurance… A significant amount according to the profiles of borrowers.
Good advice from Borrowing:
Tip # 1 is to compare home loan insurance in terms of collateral but also pricing. So you should not only look at the total cost of insurance but the guarantees provided in the contract as well as the exclusions.
A mortgage loan insurance broker such as Lite Lender will allow you to choose the offer that best suits your situation.
Find the best loan insurance, it’s easy and free!