a radical change on September 1st! For who ?

LOAN INSURANCE. From 1 September, the second phase of the mortgage insurance reform will come into effect. It offers the possibility to withdraw from the contract at any time, but not only.

[Mis à jour le 29 août 2022 à 16h02] On Thursday 1 September 2022, the second phase of the Lemoine law will come into effect, aimed at making it possible to terminate the loan insurance contract at any time. Enough to allow around 7 million borrowers to make significant savings by playing competition. Recall that from 1 June the new borrowers already had the possibility to break the contract at their leisure. From now on, it will be the same for all ongoing contracts. A radical change highly anticipated by most French borrowers.

The Lemoine law doesn’t stop there. In fact, it also endorses the end of the medical questionnaire for loans below € 200,000, and € 400,000 for a couple. A valid device if the loan is due to expire before the 60th birthday of the insured. Finally, there is also a reduction of the right to be forgotten from 10 to 5 years. Have you completed cancer or hepatitis C treatment and are in remission? Double “good news”, also adopted the reduction of the right to be forgotten! You will only have to wait 5 years after your remission to not have to report it to your insurer, compared to 10 years before.

Individual or collective insurance contract for real estate mortgages, borrower insurance guarantees the repayment of a loan. This insurance is both a security for the people who borrow, and for the lending organization, especially banks. The borrower’s insurance covers the payment of all or part of the residual credit repayment terms when in certain situations such as permanent disability, job loss or even death.

The borrower insurance is a guarantee for both parties: it covers the insured (in whole or in part) in case of difficulty in paying the monthly credit installments, on the other hand it protects the financial institution that will be compensated in case of default of the insured.

Keep in mind that before making you a home loan offer, the bank may require you to obtain borrower insurance. The bank sets the minimum guarantees (example: death, disability). Then make an estimate of the cost of insurance for your future credit. But you can go to another insurer. The borrower’s insurance covers the payment of all or part of the repayment installments of the remaining credit when in certain situations such as death or permanent disability.

The Anytime Termination of Borrower Insurance took effect Wednesday, June 1, 2022. A small revolution in the world of mortgage insurance, a sector more than 88% owned by banks. From now on, you are free to compete for a more attractive rate at any time of the year. No more waiting for the contract anniversary date. You are free to make your choice.

The Lemoine law was adopted in February 2022 and facilitates access to mortgages. People who pose a serious health risk will now have a better chance of eliminating one. It allows you to withdraw from the borrower’s insurance contract at any time, for everyone and free of charge for those who have stipulated a real estate loan for mixed housing use. It also guarantees the right to be forgotten (explained below) and removes the medical questionnaire.

Parliament adopted on Thursday 17 February 2022 the termination of the borrower’s insurance at any time. In other words, a borrower can now terminate his mortgage agreement at any time, while up to that point he was obliged to wait for the anniversary date. The target. the goal? Create more competition to reduce costs for consumers. The effective date of such termination at any time of the borrower’s insurance is known, the June 1, 2022 for new contractsthe September 1st for ongoing contracts.

It does not stop there, the insurers now have, with this reform, the obligation to do so strengthen information relating to borrowers regarding their right to withdraw prior to the anniversary date of their contract. Furthermore, all grounds for refusal must now be explained And Press releases to borrowers, as soon as resolution is refused. A severe blow, especially for the banking institutions that hold up 88% of this juicy market. In the future, the banks will have to share the cake.

The borrower’s insurance rate varies greatly from one contract to another, depending on the amount borrowed, the length of the contract, but also the age and health of the borrower. The effective annual insurance rate (TAEA) represents the cost of insurance for the borrower, as a percentage of the total mortgage amount. For example, a rate of 0.5% represents an annual contribution cost equal to 0.5% of the borrowed capital (and not the residual capital to be repaid).
Here is an estimate of the mortgage loan insurance rates applied based on the borrower’s profile, according to broker Empruntis:

Borrower profile Mortgage loan insurance rates
20 years old not smoker 0.05%
20-year-old smoker 0.08%
30 years old not smoker 0.09%
30-year-old smoker 0.13%
40 years old non-smoker 0.17%
40-year-old smoker 0.25%
50 years old not smoker 0.31%
50-year-old smoker 0.33%

Do you want to know your lending capacity based on interest rates? Go to the Public Service website to find out about your mortgage potential, the amount of your borrower insurance, the duration of the loan and the monthly installments you want. You will find the form right here.

Unlike car insurance or home insurance, home loan insurance is not not required. But in reality, it is systematically required by the lender that grants you a mortgage. If you wish to escape this insurance, you can pledge your property, but this is generally only accepted for high net worth borrowers.

When insurance is optional, depending on the amount borrowed and the repayment period, the borrower may have an interest in subscribing it in order to repay his monthly payments in case ofaccident of life.

The medical questionnaire was at the center of lively debates between deputies and senators. Now the the medical questionnaire will be deleted for loans of less than € 200,000As far as 400,000 euros for a couple. Please note that this new measure will apply only if, and only if, the loan is due to expire earlier 60th birthday of the insured.

This new measure represents a significant advance for all patients with disease cancerous, psychic Where is it respiratory, among others. Before the reform, these borrowers were obliged to report their illness, which necessarily generated a significant increase in the amount of their insurance. It is now ancient history with this removal of the medical questionnaire, which would be worried more than half of the borrowers.

You have completed treatment against a cancer or in front of theHepatitis C and you’re in it remission ? Double good news, the reduced right to oblivion was even adopted! You won’t have to wait any longer 5 years after your remission so that you no longer have to report it to your insurer. Previously, this time it was 10 years. It is therefore halved as part of the borrower insurance reform. The period during which the additional costs can be charged to the policyholder is therefore much shorter, which should allow policyholders to save money.

Borrower’s insurance mainly covers three types of risk: the risk of death, the risk of disability and the risk of job loss. In case of Death of the insured, the insurer reimburses the residual capital to the financial institution. Warranty disability “it may concern functional disability, the impossibility of exercising a professional activity or the total and irreversible loss of autonomy”, states the French Insurance Federation. In this case, the insurer reimburses all or part of the residual capital according to the contract stipulated by the insured. There is also a guarantee against the loss of a job. Depending on the contract, the insurer will repay all or part of the remaining capital to the financial institution.

The bank you take out a loan with generally offers you a borrower insurance contract. If signing this contract is convenient, it is not necessarily the best financial solution.

Another solution is to choose a contract from an insurer yourself. It is called insurance delegation.. This way you can get a more attractive contract. Important detail, if you choose in this way the “presented contract” [à l’établissement de crédit] must present a level of guarantee equivalent to the insurance contract offered by the credit institution “, remembers the French Insurance Federation. In this case, the financial institution with which you took out the loan will not be able to refuse it.

As your loan process progresses, the lender will generally provide you with a standardized information sheet (FSI). “This sheet presents in particular the insurance guarantees required by the credit institution for the granting of a loan, as well as a quantified example of the cost of insurance,” explains the French Insurance Federation. This standard form precedes the delivery of a personalized file linked to your credit report.

The custom sheet is essential if you choose a different insurer than the one offered by your financial institution. It will allow you to compare offers and make sure that the level of insurance is similar between the contract you subscribe to and the one offered by the financial institution. Once you have taken out the borrower’s insurance, you will need to present the insurer’s file to the lender so that he can validate the contract.

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