Insurance and Mortgage: Strategies to Reduce Monthly Payments
Applying for a mortgage is always accompanied by borrower insurance. For the record, this non-mandatory coverage is valuable during the life of the loan. In the event of an accident, illness, disability and even death of the borrower, it is triggered to repay all or part of the monthly loan installments.
In almost 8 out of 10 cases, this protection is taken out with the lending institution. When granting a loan, the banker systematically combines a collective insurance contract from his insurance subsidiary. Although simple and quick, this is a “turnkey” solution however, is not an isolated case. The 2010 Lagarde law allows insurance delegation, ie the option for a borrower to choose their contract with an insurer outside the bank.
However, this individual protection may prove to be more competitively priced. “Thanks to the delegation of insurance companies, we often manage to divide the insurance premium originally proposed by the bank by two and sometimes even by three. This win is not neutral and can save up to €50,000 on a 25-year loan.” says Toufik Gozim, Founding President of Assurly.
Not 100% insured
This parade saves because “These expenses are not neutral in a budget. It accounts for 20% to 30% of the total cost of a loan.” says Astrid Cousin, spokeswoman for broker Magnolia. Another argument in favor of the delegation option: It enables an annual percentage rate (APR) that is below the extraordinarily low wear and tear.
“This low level of usury particularly disadvantages young people with low incomes, who are offered high interest rates by the banks. Combining the nominal interest rate, insurance costs, warranty and filing costs, the APR is quickly approaching or exceeding the attrition rate. That makes financing impossible. assures Antoine Meeschaert, director of Meilleurtaux Lille. Hence the interest in opting for the cheapest individual coverage.
Another way to control insurance costs is to opt for 50% coverage instead of 100% per capita when borrowing jointly. This scenario has the effect of lowering the APR. Broker Empruntis states that for a loan of €200,000 over 240 months at an interest rate of 1.55%, 100% insurance on two heads gives an APR of 2.23%. The latter goes to 1.90% with 50% on each head.
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