Mortgage insurance: why change contracts in 2022?

Do you have a mortgage? You are probably covered by loan insurance, which guarantees the repayment of the loaned amounts in the event of default on your part. This insurance is expensive, especially if it is taken out in the lending bank. It’s not a death! Thanks to the Lemoine Law, you can terminate the current contract at any time and choose a much more competitive formula.

Very expensive mortgage insurance

L’mortgage insurance is not required by law, but required by the bank to secure your loan. This insurance is therefore a mandatory product to obtain bank financing for any real estate project.

The insurance intervenes ifthe vagaries of life which would deprive you of resources to honor your debt (death, disability and retirement). The law allows you freely choose the loan insurance agreement, allows you to be covered at the right price.

But all too often, it takes time to complete their request for financing, the borrowers subscribe toinsurance offered by the bank. When the latter does not apply pressure, condition of the grant of the loan to the subscription of its internal contract. This practice is prohibited, but the weight and natural authority of the professional on a ground which he perfectly commands, unlike his client, precedes the right of free choice of the mortgage insurance contract.

that mortgage insurance costs is added to loan interest and other incompressible expenses (application fees, mortgage or deposit, etc.). On average, the insurance weighs between 30% and 40% of the total costs of a mortgage loanexpressed by APR (Global Effective Annual Rate). This indicator is necessarily below wear rate applicable in the relevant period.

If you have subscribed to group insurance agreement of the bank, you are not trapped! You have the right to that cancel anytime and for free thanks to the Lemoine Lawthe latest regulation strengthening borrowers’ rights.

Change borrower insurance with the Lemoine Act

Adopted in February 2022 and entered into force on 1 June Lemoine’s law drives a real one revolution in mortgage insurance. Unlike the Hamon law and Bourquin law borrower insurancethat mortgage insurance modification is no longer subject to any expiry date: you have the option terminate the current contract whenever you wish, and this the day after signing the loan offer. L’mortgage insurance is THE only insurance that can be canceled at any time without commitment to the minimum commitment required by law Home insurancecar insurance and mutual health.

That replacement of insurance remains subjectequivalence of the guarantee level : the new contract must offer protection that is at least equivalent to that in the bank contract.

The purpose of the Lemoine Act is to further open up a market 87% owned by bancassurance companies, which recently has been replaced by the European regulator. Their dominant position on this product defies all logic healthy and fair competitionand deprives borrowers of an opportunity to lower the price of their mortgage. The banks move in up to 70% loan insurance marginsagainst an average of 20% to 30% for alternative insurance companies.

The Lemoine Act requires banks to respect several obligations:

  • borrower must be informed every yearon any durable medium, of his right to change insurance at any time;
  • the bank’s response must be made within one 10 working days in connection with a request to change mortgage insurance;
  • any refusal must be fully justified in writing and on a single document.

Savings and better coverage with the Lemoine Act

Delegated contracts are between two and four times cheaper than bank offers. This argument alone justifies a substitution approach. External insurance also makes it possible to be custom-made cutlery, to meet their real needs. Group contracts are sharedbecause they must cover a community of borrowers, unlike competing formulas whose guarantees adapt to each person’s profile.

You have the opportunity to do that lower the price of mortgage insurance in 2022, and by capillarity that your credit. The savings amount to hundreds or even thousands of euros over the remaining term of the loant. As part of a loan of €250,000 over 25 years, changing insurance within three years of signing the loan offer can generate up to €15,000 in profit.

Don’t wait to save money on your mortgage insurance! At a time when household purchasing power is being dragged down by inflation and skyrocketing energy costs, it is Lemoine’s law allows any borrower to reduce the weight of your insurance of several tens of euros per month, which together constitute a significant gain in the long term. The sooner you switch, the bigger the savings.

The use home loan insurance comparator, a simple, free and fast tool that gives you access to the best deals on the market. choose contract adapted to your needs and don’t hesitate to apply for one mortgage insurance broker to help you choose most competitive formulain accordance with the equivalence of the guarantee.

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