The real estate market is in turmoil: Interest rates on new mortgages have risen since the beginning of the year, after being low for a few years (still peaking at 1% in winter 2021). This increase is expected to continue. For buyers, this will change the situation twice, for their loan and home loan insurance, which is another element to consider when calculating the purchase of a home or apartment.
What is home loan insurance?
Home loan insurance is insurance that allows borrowers to cover the repayment of their home loan maturities, if they happen to be no longer able to repay. Future owners are not immune to the unexpected, such as a layoff, job loss, accident, illness, or even death. Loan insurance reassures banks, and therefore they have the certainty that the debts will be repaid in all cases, and on time. Depending on the collateral and quota chosen, the monthly payments are covered in whole or in part.
Legally, home loan insurance is not mandatory. However, for granting housing credit, banks usually ask for it. Other alternatives to reassurance are a mortgage, a guarantee, or a lien.
Home loan insurance contract of your choice
When it comes to entering into a home loan insurance contract, the regulations allow you to choose the contract you want. There is no obligation to take the offer made by the bank that lends the money! It is often more economical to take another formula from a competing insurance company. Alternative contracts offered by offshore insurers are often two to three times less expensive than group contracts for banks. The insurance authorization allows you to save up to 15,000 euros for the duration of the mortgage.
To help consumers make the best choice, Magnolia.fr selects the online comparison for each buyer of the most suitable insurance(s), at competitive prices from about twenty decades of offers of market leaders in the field of insurance, in order of performance.
How much does it cost to secure a mortgage loan?
The cost of insuring a home loan is very variable, depending on each person’s profile (age, profession, playing a risky sport, etc.) the bank.
But you should know that mortgage loan insurance can account for up to a third of the total cost of your mortgage, or even, in some cases, as much as the interest of the loan. Insurance rates range from 0.07% for the cheapest offer to more than 1% of the borrowed capital.
Home Loan Insurance and Lemoine Law: What Will Change From June 1, 2022
With the new Lemoine law, adopted last February, conditions have changed recently, particularly in favor of patients.
Since June 1, the medical check has been canceled for mortgages below €200,000 that expire before the borrower’s 60th birthday. It will be easier to buy real estate for people with the disease.
In addition, people who have signed a housing loan from June 1 can change the borrower’s insurance contract at any time for free. At the moment, the procedure only pertains to new credits. Loans that were due on June 1 must wait until September 1 to be affected.
How to renegotiate insurance terms to save money
For buyers, it is more time than ever to compare loans. Especially since insurers could increase insurance rates for people in good health, up to 20% by 25%, in order to fund the loss of income caused by patients (for whom they were paying higher rates).