Is it necessary to obtain insurance for the borrower?

Is it necessary to obtain insurance for the borrower?

When borrowing from banks for a property, they usually require mortgage loan insurance. Depending on the age of the borrower, his professional status, his practice of risky sports, the total amount of credit, the cost of such insurance is very variable. It can represent one third of the loan. This borrower’s insurance covers the person who took the loan in the event of an accident, disability, job loss or death preventing him from paying his monthly installments. This protects the bank. This is why getting a home loan with this borrower’s insurance is so complicated. However, no law requires it!

For those who wish to avoid this at all costs, there are alternatives to reassure their bank.

  • A pledge of a portion of a financial asset consists of a pledge of one or more movable assets. If there is a default on the part of the borrower, the lending institution can repay itself. Life, goodwill, or SCPI shares can be pledged.
  • Mortgage;
  • Security.

To find loan insurance, the borrower can either take out group insurance from their bank (which they can terminate later), or choose individual insurance (also called “insurance authorization”). To pay the lowest possible amount for mortgage loan insurance, comparison allows you to compare the different offers of the leading institutions in the market. They vary greatly depending on their condition and facilities. To make the calculation, first asks the borrower to provide information on his age, type of loan, loan amount, loan term, etc. Comparing this way can save up to 15,000 euros!

Lemoine Law: Liberalization of Borrower Insurance since June 1, 2022 is not just for new buyers. The comparison also relates to those with a loan outstanding: since June 1, 2022, the Lemoine Act has made it possible to change mortgage loan insurance at any time. The release of the borrower’s insurance relates to loan offers issued from this date.

For existing mortgages, you will have to wait until September 1, 2022 to change. A welcome opportunity for many borrowers, in these times of accelerating inflation where everyone is looking to save money.