Real Estate Credit Insurance is a guarantee that automatically accompanies your home loan. This is why it is also called borrower insurance. It aims to guarantee the repayment of all the monthly payments on a credit contracted. Indeed, during the agreed term to repay a loan, the borrower can face many difficulties.
This insurance policy will therefore protect the bank from these outstanding payments
This insurance policy will therefore protect the bank from these outstanding payments, especially in the case of disability or death. So, even if in theory, it is not mandatory, no bank will accept to grant you a loan if you do not subscribe to this insurance in advance. There are several types of guarantees for mortgage credit:
- Death: according to the insured portion, the insurer undertakes to repay the credit completely if the insured dies.
- Disability: according to the insured portion, the insurer undertakes to fully refund the credit if the insured is totally and permanently disabled.
- Job loss: In the event of unemployment following a dismissal, the insurer undertakes to repay part or all of the credit maturities or the possibility of postponing the monthly payments.
- Incapacity for work: In the event that the insured person is temporarily unable to perform his work, the insurer undertakes to repay part or all of the credit.
The first two guarantees are the most important for the bank or lender when it comes to mortgage insurance. However, you can also subscribe to the other guarantees mentioned above. See here.
When you want to buy real estate, banks will automatically ask you to subscribe to a credit insurance like credit-assurance.com, although it is not mandatory because it is as much in his interest as yours.
What are the advantages ?
The first beneficiary of this insurance is the bank because being the body that grants the loan, it protects itself from the risks of unpaid. It is therefore a means to guarantee the continuity of its services and avoid bankruptcy since unpaid debts are the main causes of slowdown of an activity.
For its part, the borrower will also be indirectly protected. Since the debt is borne by an insurer, it will not be passed on to your heirs in the event of death. You will also be sure to keep the property in the event of loss of employment or disability. This is why you have to choose the guarantees you subscribe to based on your needs and your profile.
From an expert point of view
As a customer, you need to know that banks are doing everything they can to get insurance from them even when you can do it in another organization. Since 1 January 2018, borrowers may freely terminate their mortgage insurance policy and introduce competition to benefit from a decrease in the cost price of the property.
How much does this insurance cost?
The cost of your insurance depends on several factors: the chosen quota, the organization, the type of credit, the amount of the loan, the age and state of health of the borrowers, the duration of the loan … The organization that you choose will also make a risk assessment, ie the eventualities of non-payment in your condition. See here.
The organization will then determine an insurance rate TAEA or annual insurance rate applied on the amount borrowed, from which it will be possible to know the annual cost of your home mortgage insurance.