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In the context of high inflation and while volatile stock markets and bear markets are less attractive, investors may be drawn to real estate, a reassuring tangible investment particularly suitable for the current period. In fact, despite higher interest rates, mortgages still make it possible to take advantage of the positive leverage effect given high inflation. In addition, real estate tends to rise in times of inflation and rental investments remain interesting despite everything because they generally benefit from a (at least partial) index of the rental price on inflation. Are you planning to take advantage of the period to implement a real estate project on credit and have some questions about borrower insurance? Find out in this article the four points to remember about borrower insurance to get the best of it.
Is it mandatory?
First, be aware that borrower insurance is not mandatory. Anyway, not in the eyes of the law. In fact, it’s completely different. You will be hard-pressed to find a bank that agrees to give you credit without adding borrower insurance, insurance that turns out to be a sine qua non of getting credit. And even if the bank is already trying to minimize the risk by careful study of the file (especially in terms of contribution, income, seriousness in keeping accounts, etc.) as well as the mortgage guarantee (mortgage, home loan guarantee, etc.), it has the right Request to subscribe to the borrower’s insurance for any home loan acceptance.
Also Read: How to Make Sure of Buying Your Dream Home?
How much is it ?
The borrower can quickly crypto insurance. Although it often represents less than 0.5% of the borrowed capital, the bill can be hefty depending on the amount borrowed. It is therefore important to strive for competition to get the best insurance for the borrower at the best price. Remember that online players will post average annual rates around 0.10% when traditional banks exercise more average annual rates around 0.40%.
Be careful though, as there are large variations in rates depending on the condition of the borrower, especially his age, health, and occupation. Thus, studies tend to show that the average borrower insurance rates for bank contracts, for mortgages over 20 years old, are about 0.25% of the borrowed capital for insured people aged 25 years, compared to 0.45% for insured people who are 25 years old. They are 45 years old. The average annual rate offered to an office manager will also be much lower than that offered to a worker dealing with heavy or dangerous objects, who will be offered a lower rate than, say, a soldier.
How do you choose it?
The first thing you need to do is identify your needs. You are not obligated to choose all warranties and you may exclude some warranties. For example, it seems obvious that you would not opt for a job loss guarantee if you were self-employed or if you were a civil servant. Also consider distribution between borrowers if you are borrowing from two. It does not have to be 100% covered for both borrowers. Often times, the bank will require coverage of at least 100% coverage between the borrowers. If your income is very similar, you can choose to have each insured be 50%, for example, or 80%, for example, for risk-averse people. On the other hand, if a person earns three times more than his wife, it may be interesting that 100% coverage belongs to him and the actual spouse who contributes less to repay the loan is only 50% or 30% per example.
It will also be necessary to choose the right representative for your borrower’s insurance, that is, a reliable, well-known and recognized representative (if he goes bankrupt, the consequences can be disastrous for you).
Finally, you will of course have to choose the serious representative who will offer you the most competitive rates regarding your profile and the guarantees you want.
How do you change it?
Think you didn’t get the best borrower’s insurance and want to change? Since the Lemoine Act, it is possible, at any time, to change the borrower’s insurance. Please note that there are still some limitations to consider. First, you can only change contracts if the warranties are similar (or more important). It is not possible to reverse your decision and seek to reduce the cost of insurance for the borrower by concluding a contract with lower guarantees. Indeed, in this case, the lending institution has the right to refuse your application to change the borrower’s insurance.
In concrete terms, the insured must send by registered letter to the banking institution and / or insurance company a request for the termination and new insurance contract of the selected borrower with an estimate accompanied by the general conditions of the contract.