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Mortgage loan insurance: the golden rules for getting a better rate

Your borrower insurance generally accompanies your mortgage and allows you to pay the outstanding capital of your loan if you find yourself unable to repay it. The insurance rate for your loan varies according to several criteria: your borrower profile, the amount and duration of your home loan, and the organization with which you decide to take out your insurance contract. Rates can vary from simple to triple, so be careful and take the time to compare the different proposals available to you before making your choice.

Mortgage loan insurance: the golden rules Insurance for getting a better rate

Home loan insurance: what are your rights?

When you decide to borrow to make your real estate purchase project a reality, the lending organizations require that you take out insurance covering the risks associated with death, incapacity, invalidity, and total and irreversible loss of autonomy (PTIA). If you are unable to pay the monthly repayments of your credit, the borrower insurance will then take over. The rate of your borrower insurance varies, and the good news, you are entitled to choose it. Maël Bernier, Communication Director of the real estate broker Meilleurtaux.com, returns in the to the interest of comparing and changing mortgage loan insurance contracts to save money. 

“It is very important to know the law and your rights,” says Astrid Cousin, spokesperson for Magnolia.fr. The three texts which must be read are the Lagarde Law, the Hamon Law and the Bourquin amendment”. Here is a brief reminder of the legislation governing the subscription to borrower insurance:

  • The Lagarde law of 2010 introduced the possibility for the borrower to freely choose the insurance for his mortgage, in particular by contacting an organization other than that of his bank;
  • In 2014, the Hamon law gives the right to terminate one’s insurance contract within the first twelve months following the signing of the loan offer;
  • Since January 1, 2018 , with the entry into force of the Bourquin amendment , it is possible to terminate your insurance every year (the level of guarantees offered by the new contract must be at least equivalent).

Mortgage loan insurance: discuss the subject with your bank from the start

It is very important to raise the subject of your borrower insurance from your first meeting with your banker, when discussing the arrangement of your mortgage. “It is better to know the position of the banker quickly , says Astrid Cousin . Is he open to taking out borrower insurance elsewhere or, on the contrary, reluctant to favor such an option? It is important to talk to your advisor before all his calculations – including group insurance – have been made. Otherwise, a new calculation will be necessary and you will lose valuable time. »

Also remember to compare the Annual Effective Rate of Insurance (TAEA), ie the indicator as a percentage of the cost of your insurance , reduced to the amount of your loan. Avoid offers based on a contribution that is the same throughout the duration of the loan, and favor contracts linked to the outstanding capital, the premium of which will drop every year.

Mortgage loan insurance: compare offers and choose the best rate

There are many tools available online to find the insurance that will be best suited to your borrowing profile and your needs. “We absolutely must not neglect this approach because the loan insurance represents 30% of the cost of the mortgage and the rate of a borrower’s insurance can vary from simple to triple. We encourage you to compare the offers and not to keep the insurance taken out with your bank, which takes 70 to 80% of the margin on this type of product”, continues Astrid Cousin.

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