Borrower insurance and SCPI: How to change it, how to do without it - June 2022 - News - SCPI - Meilleurtaux Placement

Borrower insurance and SCPI: How to change it, how to do without it – June 2022 – News – SCPI – Meilleurtaux Placement

finally ! The long-awaited, at any time the termination of the borrower’s insurance, contracted as part of the mortgage, enters into force. Great news for the millions of French who will be able to save money. Although this insurance is mandatory for the purchase of real estate, there is an exceptional case that allows real estate assets to be purchased without loan insurance. We explain everything to you in this article.

Termination at any time is effective

This is great news for millions of French people. Since June 1, 2002, borrowers can terminate the loan insurance, which must be taken as part of the credit financing for the purchase of real estate (primary residence, rental investment) at any time. More specifically, the June 1 date applies to balances completed after that date. If you have credit in progress before this deadline, from September 1 you will have the possibility to terminate your borrower’s insuranceto change it whenever you want.

Why change your credit insurance? Because often, borrowers get expensive insurance, offered by the bank, and can benefit from a better offer. with the key, Thousands of Euros are saved over the term of the loan. With the sharp decline in mortgage rates observed during the 2010-2020 decade, the cost of insurance is weighing on household budgets. The ability to terminate the contract at any time (rather than once a year, on the anniversary date of the contract) in order to opt for a more competitive offer is thus a huge step forward.

This reform, resulting from the Lemoine law passed in February 2022, is accompanied by other measures. The medical questionnaire, used to determine the loan insurance rate based on the borrower’s health status, will not be required for mortgages below €200,000, provided the credit reaches its maturity date before the age of 60. Finally, the period of the right to be forgotten, which is for people who have suffered from cancer in particular, has been cut in half, from 10 to 5 years.

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Compulsory insurance for the borrower most often … but not always!

If securing a loan is mandatory for the purchase of a primary residence or rental property, there is a special case in which it may be optional. This particular case is the SCPI stock purchase on credit, which is an especially relevant asset management technique for savers who want to tap into their savings capacity. To have a large and profitable real estate portfolio.

In most offers referenced by Meilleurtaux Placement to finance the purchase of SCPI shares on credit, the borrower’s insurance is only optional. In other words, it is possible to save several thousand euros by dispensing with this insurance, compared to the physical acquisition of real estate.

For example, CFCAL offers – Crédit Foncier et Communal d’Alsace et de Lorraine – An investment solution in SCPI on credit with optional insurance for the borrower that allows financing a large number of SCPI on credit, especially foreign SCPI. Among the other features it has to offer:

  • Bank domiciliation is not required
  • No contribution required
  • Unrestricted life terms: Possibility to borrow up to age 85 at the end of the loan
  • Financing from 10 to 25 years
  • Wide range of SCPI: In particular, many SCPI projects are invested mainly outside France. Investing in SFPI allows you to diversify your investments and benefit from lower taxes
  • There are no application fees or other additional costs

To access this offer, you must have physical real estate assets (RP, RS, RL, LMNP managed, excluding SCPI, parking, barn, etc.) in mainland France (excluding Corsica and Dom Tum). This offer is not available to non-residents, the self-employed and business leaders, but it is available to the liberal professions.

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Want to secure? Meilleurtaux Placement takes care of finding the best offer for you

Of the offers selected by Meilleurtaux Placement, only one requires a borrower’s insurance signature. As part of our partner Orange Bank’s offer, loan insurance is mandatory … but by authorization! So you choose the terms of your insurance, rather than having to choose a lender bank. Welcome flexibility, accompanied by other advantages of this offer:

  • Bank domiciliation is not required
  • No contribution required
  • Possibility of financing over 5 to 25 years, on depreciable credit (minimum €50,000, no maximum)
  • Possibility of investing in several sustainable crop production intensification projects with the same loan
  • Home loan guarantee fee, financed about 1.7% of the loan amount
  • Application fee (unfunded): 900 EUR

Additionally, many of the SCPI indicators that appear in our 2022 list of the best SCPIs can be funded, including:

  • ActivImmo
  • PF Greater Paris
  • Vendome regions
  • Primovi
  • property savings
  • everlasting

This offer is for sole proprietors of net real estate assets (credit deductible where applicable) in continental France. Shares of joint ownership, garages, vacant lands, sustainable intensification of crop production and property are excluded in case of division.

This offer is not available to non-residents and legal entities.

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Use the credit leverage to build real estate

with a fixed monthly savings capacity (50, 100, 500, 1000 euros), The investor can take advantage of the leverage of credit to make a real estate investment in sustainable intensification of crop production. He will then use his savings ability to repay the loan. And he won’t bother managing or collecting rents to deal with, because SCPI’s management company takes care of everything!

With a savings capacity of 300 euros per month, one can get, from the first year, thanks to credit, an invested capital of about 100,000 euros. Credit allows the individual to invest in sustainable intensification of crop production with primary financing, initially, by the Bank. This is leverage, the ability to immediately benefit from a large investment that results in attractive returns.

These returns will cover the cost of the credit (interest) but will also partially repay the monthly payment. So the acquisition is partially funded by the rents paid by SCPI!

Suppose you borrow €100,000 over 15 years to invest in a parity of crop production yielding 4.5% (average parity of production in 2021). From the first years you will receive 4,500 euros in return.

To pay off the credit, you will have a monthly installment to pay, which is around 600 euros per month (interest included) in our example. And since your income is around 375€ per month, you only have 225€ per month left to invest in this project. After 15 years, the credit is paid off, so you are the owner of a €100,000 legacy, which could be €110,000 or €120,000 if the stock price is revalued.

Discover our range of SCPI with credit

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Non-contractual communications of an advertising nature.

SCPIs are long-term investment vehicles (minimum 10 years) and must be acquired with the aim of diversifying your assets.

Past performance does not indicate future performance and is not consistent over time.

Like any investment, real estate presents risks:

Decreased investment value. The capital invested in SCPI is not guaranteed. Equity value in SCPI evolves over time, with respect to the state of commercial real estate. This position is followed by successive cycles, with ascending and descending phases.

Decreased rental income. In a less favorable economic context, a decrease in the rental income paid to partners is due to a decrease in the financial occupancy rate and/or a decrease in the total amount of rent paid by the tenants. However, this decline may be mitigated by the effect of pooling risks thanks to real estate and rental diversification of the SCPI portfolio.

Liquidity. Since SCPI is not a listed product, it has less liquidity compared to financial assets. Thus the terms of sale (deadlines and price) may vary depending on the development of the commercial real estate market and the SCPI stock market.

Non-contractual information. The assumptions made in this article cannot be taken as an offer of credit. Of course, no application can prejudge the decision of the lending institution whether or not to grant the requested credit. The credit is obligated to you and must be repaid. Check your ability to pay before committing. No individual may be required to make any payment of any kind prior to obtaining one or more financial loans.

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