Borrower insurance: compulsory or not?

When taking out a home loan, several questions invariably arise. How can I save on my mortgage? How to get an attractive rate? Here are two basic and recurring questions. Another is to ask whether borrower insurance is compulsory or not; the answer is simple, legally there is no obligation to take out borrower insurance in the context of a real estate purchase. That being said, we have to look reality in the face. Concretely, banks are extremely reluctant to grant a mortgage without borrower insurance. This does not prevent you from trying your luck and going around the banks to see if one agrees to finance your project without insurance, but this has little chance of success. On the other hand, do not forget that since 2010 and the Lagarde law, your borrower insurance contract can be signed with an insurer that is not your bank, which can allow you to make certain savings, provided that said contract presents levels of guarantee at least equivalent to those offered by the bank which grants you your mortgage.

Solutions exist to do without borrower insurance

Borrower insurance covers you in the event of permanent disability (partial or total), death, temporary incapacity for work, or even loss of employment. It therefore constitutes a solid guarantee for banks, but they can sometimes accept other solutions, starting with collateral. Concretely, the pledge is a guarantee that you bring to the bank by the property of real or movable property, or even financial investments, most often life insurance. Note that to obtain an agreement, you must present a solid and reliable banking profile. Another possibility, the surety, that is to say the fact that a third person acts as guarantor for your mortgage. Generally, the surety is provided by a relative, often a family member, but it is also possible to contact so-called mutual surety organizations. Finally, if you already own one or, even better, several properties, you can apply for a mortgage without borrower insurance as part of a mortgage. Be careful all the same, in the event of non-payment, you will lose the good pledged.

Borrower insurance, an evolving system

Since 17-2-2022, the borrower insurance system has undergone significant legal changes that should be known. First of all, the law now offers you the possibility of changing insurer at any time, which can make it possible to find more attractive rates (provided you have at least equivalent guarantees). Another important change, it is no longer mandatory to complete a health questionnaire if the amount of the mortgage does not exceed 200,000 euros for a single person or 400,000 euros for a couple. Note that this measure only applies if the home loan contracted is repayable before the subscriber turns 60. Finally, the right to be forgotten period has been reduced from ten to five years. Thus, people who have been victims of a pathology (cancer for example) or an infection are no longer obliged to report it five years after the end of the treatment protocol.

(By the editorial staff of the hREF agency)

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