Exceptional borrowing conditions sometimes lead borrowers to pay more with loan cover premiums than for interest over the entire term of the loan.
In October, mortgage loan interest rates dropped further to record low levels, according to the Housing Credit Observatory. The average was 1.13% over all durations, 0.90% over 15 years, 1.05% over 20 years and, finally, 1.32% over 25 years. Undeniably, the cost of home loans is drained with the fall in interest rates, which is absolutely not to displease the French.
Rates have never been lower than in October 2019
Now, this is a particularly singular and yet very real situation, but it does happen that some homeowners are left with a mortgage offer where the cost of insurance, which guarantees the credit generally until its repayment, is higher. to the total addition of interest due.
Of course, not all people who take out a loan are affected. In this case, the credit rate granted by the bank must be very low. Or, a more expensive insurance rate may arise for borrowers deemed at risk after analysis of the medical questionnaire. To deduct the appropriate cover, the bank or the external insurer, in the case of a delegation of insurance for example, must assess the state of health of all borrowers in the household. In the present case, a more advanced age, illness or risk of accident following the practice of a dangerous trade or an extreme activity, in particular, reassess the amount of the premium.
Back on how to change mortgage insurance
This is why borrowers are advised not to focus exclusively on the interest rate, but also to include the insurance rate in negotiations with the bank. And in the absence of a premium at the best price, the delegation of insurance gives the right to borrowers to choose a cover from a competing insurer. In practice, the steps to refuse or cancel the bank’s loan insurance, called group insurance, work in different ways depending on the situation.
First, the borrower can delegate his insurance even before financing is started. He must then claim the Standardized Information Sheet (FSI) from the lending organization so that the contract of the external insurer can at least guarantee the conditions required for the granting of the mortgage. In addition, the household can trigger this same delegation process on the date of its choice during the first year of repayment of the loan. Finally, after this period, the household can request to change insurance on each anniversary date of the signing of the loan offer after having informed its bank at least 2 months before the due date.