Low mortgage rates attract borrowers. Indeed, the French are many to realize their dream of buying their first home or a second home. While attractive rates favor homeownership, borrowers should not neglect the cost of their loan insurance. Because this guarantee that ensures the lender to be reimbursed in case of disability or death of the borrower can represent up to more than 25% of the total cost of financing.
Credit insurance, a significant weight of real estate financing
In the same way that borrowers are free to look for the best rate of borrowing from financial institutions, they also have the opportunity to choose the most advantageous credit insurance for them. Since the Lagarde law of 2010, borrowers have the right to opt for the insurance delegation, that is to say choose an insurance different from that proposed by the bank. Although the Hamon law introduced the possibility of changing insurance within twelve months of signing the loan, the latest legislative provisions introduced the annual cancellation. Borrowers therefore have rights to find loan insurance at the best price. However, the ACPR points to the lack of information from consumers. The Prudential Supervisory and Regulatory Authority will publish a list of recommendations for banking institutions.
Better inform borrowers about their rights
From 1 January 2018, banks will communicate more clearly the ability to freely choose their loan insurance. The Constable of Banking Services notes that the information provided is “often insufficient” and that certain processing times of insurance delegations “slow down the process”. Buyers would therefore hesitate to extend the time by seeking external insurance for fear of seeing the sale of the coveted good pass under their noses.
From 2018, banks will be asked to indicate on their website the documents requested to investigate a delegation file. In addition, the supervisory authority wants external insurance refusals to be motivated more explicitly by detailing equivalence defects. Finally, banking institutions must respect a maximum of 10 working days to notify their response to the request for delegation. As of January 1, 2018, with the annual termination that will extend to all loans and new rules enacted by the ACPR, borrowers will have more cards in hand to find the best mortgage insurance.