How much does mortgage loan insurance cost?
Home loan insurance is not compulsory but highly recommended in the context of a mortgage, a guarantee that can quickly increase the cost of financing depending on the guarantees and the rates applied.
The cost of insurance in the context of a mortgage depends on the borrower and the amount of the loan. The higher the loan, the more insurance deadlines will have to be reimbursed to cover the borrower in the event of illness, disability, or death. The duration of reimbursement is, therefore, the first element to affect the cost of insurance. The second logically being the company offering the cover. Very often, banks and credit institutions perform good margins on these products complementary to their main activity, they, therefore, offer higher rates than the insurance companies which they specialize in these financial products. Finally, the borrower is at the center of the definition of the cost and this goes through a health questionnaire. In short, the more health concerns you have, the more you will pay.
Insurance reimbursement method
The reimbursement of the insurance can be done in two different ways, by the outstanding capital or by the initial capital. The outstanding capital offers a declining contribution which changes each month. At the start, the contributions are very high and then at the end of the contract, they are almost zero. In the case of early repayment following a cash inflow or in case of credit repurchase, this option is interesting. The repayment on the initial capital offers a fixed contribution, calculated as for the mortgage on the total capital to be repaid.
Whatever the method of repayment of the mortgage loan insurance which is selected, it is above all the TAEA (equivalent to the APR for credit) which makes it possible to determine the cost of insurance. So you have to compare the total insurance costs with each other to find out which one is the most financially attractive. The guarantees remain the second point of comparison because if certain coverages are more expensive, it is that very often the guarantees are more complete, for example unemployment insurance, more important indemnifications, higher cover…
How to reduce the cost of your mortgage credit insurance?
There are three options for negotiating better rates as part of your home loan insurance:
Insurance delegation: at the time of the mortgage loan process and if the bank’s proposal is not attractive, the borrower can use an insurance company to negotiate more attractive coverage, it is because the delegation of insurance is called. You must then present yourself with a contract having the same minimum guarantees.
Termination for 1 year: with the Hamon law, it is now possible to terminate its insurance during the first year following the signing of the contract, it is then necessary to canvass another company and present an insurance offer, again presenting the same guarantees to the minimum.
Annual termination: with the Bourquin amendment, the termination of the insurance has gained even more weight since it has been possible since 2018 to terminate on each anniversary date to change coverage and therefore negotiate better prices with a competitor.