Change borrower insurance in 2018
At the time of the subscription of credit, the lending bank requires guarantees to prevent any risk related to death, disability, incapacity for work or even loss of employment. This is how the borrower is asked to take out loan insurance. Since January 2018, it is possible to change insurance even more easily.
Change insurance in the course of the loan
Since consumer law 2014, known as the Hamon law, you have the possibility to make a change of borrower insurance during the first year of life of your mortgage agreement. Coming into force in January 2018, the Bourquin amendment reinforces this possibility. Borrowers can now change mortgage insurance by terminating their current loan insurance policy on an annual basis and replacing it with the one they choose.
What savings can be made?
Since early 2018, it is possible to renegotiate each year its mortgage insurance. This encourages borrowers to increasingly compare loan insurance offers available in the market. The competition between banks and insurance companies is tough, and offers are increasingly numerous and allow borrowers to access cheaper rates and better conditions. Changing loan insurance can save you up to 50% on its cost and thus reduce by several thousand euros the overall cost of your mortgage.
What are the conditions to be fulfilled to replace your borrower insurance?
The real estate borrower insurance market presents a multitude of offers. Borrowers make a comparison, looking for better guarantees, at a lower price and more tailored to their profile and extended safeguards. However, before you start, you should follow certain rules. In fact, first of all, it is necessary to know that the new contract subscribes to an insurer (insurance company or mutual) which presents a level of guarantees at least equivalent to the current contract. You must then send this contract, attached to your application for change of loan insurance, by registered mail with return receipt, within a notice period of 2 months before the anniversary date of the original contract. We recommend you, before you commit to this process, to begin to inform you at least 4 months before the anniversary date of the current contract.
How quickly does the bank respond?
The bank is required to make known its response (agreement or refusal) within 10 working days from the date of receipt of the complete application file for loan insurance. In case of non-compliance with this deadline, the bank is liable to pay a fine of € 3,000. If the bank refuses the request, it must obligatorily justify this refusal in writing. To facilitate the change of loan insurance, it is good that the borrower makes sure that the bank’s requirements for the implementation of a new contract are respected. On a basis defined, each bank has chosen its guarantee criteria, which are considered indispensable for granting a mortgage.