Insurance and Mortgage: Strategies to Lower Your Monthly Premiums

Insurance and Mortgage: Strategies to Lower Your Monthly Premiums

The application for a mortgage is always accompanied by insurance for the borrower. For the record, this non-compulsory coverage is valuable during the term of the loan. In the event of an accident, sick leave, disability or even death of the borrower, it is activated to make all or part of the monthly loan payments.

Approximately 8 times out of 10, this protection is taken with the lending institution. When extending credit, the banker systematically incorporates a group insurance contract from its insurance company. Despite its simplicity and speed, this “turn-key” solution is However, it is not unique. The Lagarde Act 2010 authorizes insurance authorization, i.e. the option for the borrower to choose his contract with an insurance company outside the bank.

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However, this individual protection may be more price competitive. “Thanks to the insurance mandate, we have often succeeded in dividing the premium initially proposed by the bank into two and sometimes even three. This gain is not neutral and can yield up to €50,000 in savings on a 25-year loan,” says Tewfik Josem, Founding President of Assurly.

not 100% insured

This offer saves because “These expenditures are not budget-neutral. It represents 20% to 30% of the total cost of the loan.” says Astrid Cusin, a spokesperson for Broker Magnolia. Another element in favor of the delegation option: it makes it possible to get an annual percentage rate of charge (APR) below the wear rate, which is exceptionally low.

“This low level of usury rates particularly hinders young people on low incomes to whom banks are offering high interest rates. The result, by a combination of the nominal rate, the cost of insurance, and the costs of the guarantee and file, the APR quickly reaches, or even exceeds, the wear rate. This makes financing impossible. confirms Antoine Michart, director of Meilleurtaux Lille. Hence the interest in choosing the least expensive individual cover.

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Another way to control the cost of insurance is to, when borrowing together, not insure 100% on each head, but opt ​​for 50% coverage. This scenario has the effect of lowering the APR. Broker Empruntis notes that for a loan of €200,000 over 240 months at a rate of 1.55%, 100% insurance on two heads gives an annual interest rate of 2.23%. The latter goes to 1.90% with 50% on each head.

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