When applying for a mortgage loan, among the many questions that us a recurring theme always appears arise: insurance issues related to the mortgage.
We will try to give answers to five questions that every customer should be able to answer when hiring insurance related to a mortgage loan. Are mandatory mortgage insurance? This is resolved and other questions related to the mortgage contract.
Are mandatory insurance?
The first question a mortgaged future is whether the insurance is the bank manager is offering are required.
The first thing to know is that when the bank clerk tells us that “insurance is mandatory” refers to hiring is mandatory if we want the mortgage bank approves us. Very different from that are mandatory by law thing.
In fact, legally no compulsory insurance may be necessary for the client, or the home or fire. Interestingly, when we say it is mandatory legally hire a home insurance whose beneficiary first is the bank, they forget to point out that this legal obligation is for the bank to securitize the mortgage (sell it to a third party and obtain liquidity) . In the words of the General Directorate of Insurance:
It can be concluded that current legislation does not impose a general and directly to the debtor of a mortgage required to hire insurance on mortgaged property. The rules governing the mortgage market establishes certain requirements for financial institutions to issue securities in that market. Therefore, if a credit institution wishes to issue bonds or mortgage bonds based on loans granted mortgage to owners of mortgaged properties may condition the loan to the debtor agrees to sign a liability insurance for the said property but, in any case, the obligation for the debtor will not always contractual and legal basis.
Nor is compulsory life insurance, for example. We must assess the suitability of this type of insurance and, based on an analysis of our situation, needs and preferences, contract or no insurance. And usually cheaper if we go directly to the insurer, without going through the intermediary of the bank.
Can I terminate the insurance once they have given me the mortgage?
A possibility that the mortgaged customer can ask is the following:
I have accepted the insurance contract for the bank to grant me the mortgage. Can I cancel them in the future?
If you have not spent more than 30 days of receipt of the policy, you may cancel the insurance.
On the other hand, it is also possible to cancel the elapsed year, with two months’ notice for sure. It must be communicated in a reliable way the insurer, not the bank. Much care in the practice of returning the receipt of insurance because the insurer can claim us your payment later.
In insurance, the first beneficiary must be the bank?
It is customary that the financial institution requires us to be first in the list of beneficiaries of insurance. In the case of home insurance, to charge if there is a fire that destroys the house and cancel the outstanding debt. In the case of life insurance, so that the portion of debt that allows insurance is canceled.
This practice may make sense for the insured, but also not be the best and, of course, the bank cannot force us (although it cannot grant the mortgage, which unfortunately it is in his hand in practice).
If I cancel insurance, the bank will charge more interest?
It is possible if the writing has a clause mortgage interest relief based on insurance and other links customer at the time of the review or in a previous period to it.
These clauses typically provide that if meet certain requirements, the differential is reduced to apply when reviewing the interest rate.
To find out if we cancel worth insurance and lose the bonus, we have no other to do numbers. I saved a life insurance (either by not wanting to have any, either by hiring another insurer) must be greater than what it costs us more mortgage in that period.
What types of insurance are there?
Crowd insurance are related to hiring a mortgage loan. In addition to the different variants of home insurance and visa, they have sold insurance to go to more than 80% of the appraisal (now obsolete); insurance payment protection are the order of the day. These policies pay the bank fees if the client cannot, but with time constraints and the type of customer contract that must be read before hiring them.
Beware of false insurance interest rate, which is supposed to cover us increases in the Euribor. Actually usually swaps or interest rate options, complex financial derivatives that may be convenient or a ruin, according to the time they are hired. For these products, always go to an independent consultant, before signing anything.
If a bank uses its arms to force us to buy insurance under conditions that do not interest us, we are just as smart or compare their mortgages with banks whose commercial practice is more beneficial for their clients. “Against the ugly habit of asking, there is the noble virtue of not giving”.