Since you subscribe to a mortgage for the purchase of your new home, you have the quasi-obligation to subscribe in parallel to a death and disability insurance for your mortgage. This is not legally required, but most banks will require it. It is important to know the functioning of the loan insurance immo to make real savings.
Real estate reinsurance rate: How it works
When a bank lends you money for a home loan, it requires you to buy insurance, to ensure the recovery of the sum lent in spite of the death or disability of the subscriber.
The cost of this form of credit insurance is based on the total amount loaned by the credit institution (bank or otherwise). The larger the loan, the higher the cost of credit insurance. The rate is also calculated according to your age and your state of health.
The rate applied to the total capital borrowed represents the annual amount of insurance. Example: You borrow 300,000 euros over 15 years to buy your house. The rate of your loan insurance is 1%. Each year you will therefore pay 300,000 x 0.01 = 3,000 €, or 3,000 / 12 = 250 euros per month, and this during the 15 years of the loan. Your insurance will cost you 3 000 x 15 = 45 000 € in total, since in some cases the borrower insurance takes into account the total amount of the loan. Note that, depending on the chosen insurance company, the loan insurance can take into account the amount still to be paid, also called outstanding capital (CRD) for calculating the interest on the bank loan.
Real estate reinsurance rate: Make savings!
Reducing this rate can lead you to make impressive savings, on the order of several thousand euros! Let’s go back to our previous example of a loan of € 300,000 over 15 years: if you are negotiating your mortgage insurance this time at a rate of 0.8% instead of 1%, you will pay a total of 300,000 x 0.008 x 15 = 36,000 €. Between a rate of 1% and a rate of 0.8%, the final difference is € 9,000! Finding a credit insurance with a lower rate can make you save huge amounts of money, much more than negotiating a few points on the borrowing rate!
The Lagarde Law, which came into force in 2009 and has been active since July 2010, allows you to take out home loan insurance outside the lender. A study shows that half of the French population ignores this possibility! Yet, by playing the competition, you can get insurance at very competitive rates.
So do not wait any longer to compare the offers for a mortgage insurance cheaper on our comparator insurance!