Home loan: how much can you save by changing borrower insurance?


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Borrower insurance protects against the risk of no longer being able to repay the installments of your mortgage. The Lemoine law allows you to terminate your insurance contract at any time. How much can you save by changing borrower insurance?

How does borrower insurance work?

Borrower insurance allows those who take out a mortgage to protect themselves against the risk of no longer being able to repay the installments of their loan. The insurer covers the capital remaining due in the event of death, illness, disability, incapacity for work, loss of employment.

The borrower is free to choose his borrower insurance: he can take that of the lender or take out one from another establishment provided that the guarantees are at least equal to those offered by the lender.

The Lemoine law then allows him to terminate his insurance contract at any time as soon as the loan offer is signed and to replace it with an alternative offer with equivalent guarantees.

What gain by changing borrower insurance?

Magnolia.fr, home loan insurance comparator, calculates each month the number of additional square meters that it is possible to acquire in the 20 largest French cities by changing loan insurance.

According to Magnolia.fr, a first-time buyer, aged 25 to 35 who borrows 200,000 euros over 20 years at the nominal rate of 2.20% (average rate in October 2022) would obtain for his borrower insurance an average rate of 0, 34% with his bank. He could obtain an average rate of 0.11% by competing and choosing delegated insurance. The cost of insurance would therefore drop from 13,600 euros to 4,400 euros, a saving of 9,200 euros.

A couple aged 35 to 45 who borrows together the sum of 400,000 euros over 20 years at the nominal rate of 2.20% would obtain from their bank a rate of 0.50% on each head (average bank rate for this profile), i.e. a total cost of 80,000 euros. By choosing delegated insurance, he could obtain a rate of 0.13% on each head and would save 59,200 euros.

The gain realized thanks to the delegation of insurance is all the higher as the sum borrowed is important because the cost of the mortgage loan insurance is calculated on the borrowed capital.

In the second example, the gain made would make it possible to buy an additional 5.7 m2 in Paris, 11.6 m2 in Lyon, 12.2 m2 in Bordeaux, 16.3 m2 in Marseille or even an additional 44.41 m2 in Saint- Stephen.

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