A request for financing, whether it is a mortgage, a car loan or other, is sometimes complicated for the unaccustomed. Banking establishments think above all of protecting themselves against delays and payment defaults. To this end, they impose more or less restrictive conditions on the taking out of a loan. To do this, banks require the subscription of certain guarantees before granting credit. But are they really mandatory and, if so, what is the cost?
Home loan: non-compulsory guarantees but!
In the eyes of the law, there is in fact no compulsory guarantee to take out a loan. On the other hand, the task is complicated on the side of the banking establishments. In the context of a mortgage application, which generally involves a large amount, it is quite normal for the bank to take measures to protect its investment. By agreeing to finance your real estate project, the lending institution is exposed to several risks.
Even if you manage to prove that you are quite capable of assuming the monthly payments of a home loan no worries, you are not considered a zero-risk borrower. In life, no one is immune to the unexpected: job loss, health problem, family problem, etc. Indeed, several situations can compromise a borrower’s ability to meet his financial commitments.
What is borrower insurance?
In addition to checking the repayment capacity of a borrower sparingly, some banks make it clear that borrower insurance is considered essential to obtain a mortgage. However, depending on the price charged by your insurer, be aware that under the Lagarde law, the Hamon law and the Bourquin amendment, nothing prevents you from using a private insurer who would offer a better offer.
Sometimes, it is possible to save up to 50% compared to the offer offered by your bank! Of the total amount of your home loan insurance, you may be able to keep several hundred euros in your pocket. All your lender asks is that your credit be assured, and it doesn’t matter whether it’s with them or with another institution.
What is death insurance?
Just like borrower insurance, thedeath insurance it’s not mandatory. However, no credit institution agrees to grant a home loan without this type of insurance, regardless of your financial situation. And that’s again understandable. Moreover, the older you are the borrower, the more difficult it will be for him to access a mortgage.
In addition, this insurance is actually much more advantageous for the borrower or rather his family than for the lender. In the event of death, it will be up to the bank to take charge of the rest of the maturities. Without such coverage, the family of the deceased would have to pay the remaining monthly payments, which can cause them real problems, or even force them into debt.
However, if you refuse to take out insurance for your mortgage, some banks may be accommodating and may accept your loan application, provided that you agree to pledge instead. That is to say that you agree to sell real estate in the event of non-repayment of your credit.
