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HomeInsuranceChanging Mortgage Insurance: When and How?

Changing Mortgage Insurance: When and How?

By Charlotte Beydon 14 June 2022
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Although there is no law requiring the purchase of mortgage insurance, in practice it continues an obligation for anyone who wants to obtain credit.

By imposing it, the banks guarantee themselves to be compensated in the event of disability, incapacity or death. This coverage often has high costs. Fortunately, with the Lemoine Act of 28 February 2022, it will be easier to change the borrower’s insurance. To find out more about the measures that have been implemented, it is in the first part of this article.

Concretely, the steps to sign a new contract are simple. After comparing the various proposals and choosing the most suitable oneis it necessary to mount a file.

A delegation letter must then be sent to the bank. Finally, it will be necessary to wait about ten days to receive the latter’s decision and terminate the old contract. We describe all this in the second part of this article.

To find out all about the change in mortgage insurance, the measures of the Lemoine Act, the steps to take, as well as to consult our standard letter to send to your bank, continue reading this article.

Mortgage insurance change: changes in 2022

The adoption of The Lemoine Act of 28 February 2022 is accompanied sweeping changes to mortgage insurance for consumers. Focus on these simplification measures!

Option to change borrower insurance at any time

The end of the health questionnaire under certain conditions

All borrowers had to comply the necessity of the health questionnaire. Intrusive and discriminatory, it is disappearing today.

Actually from 1eh June 2022, this document will no longer be necessary if :

  • The loan is less than €200,000 for a single person or €400,000 for a couple;
  • The total repayment of the said loan is planned before the 60theBorrower’s birthday.

With this measure, future policyholders are considered “at risk” for health reasons no longer have to bear a voluntary increase in their contribution or different and varied exclusions.

The period of the right to be forgotten greatly reduced

There are several advantages to switching borrowers’ insurance. Closer to your needs, more adapted to your current situation and state of health, more economical… By taking out a new home loan insurance with another insurance company, you have a lot to gain. Here’s how you do it.

1. Compare mortgage insurance

Before you jump headlong into choosing a new insurance company, keep in mind that price should never be your only criterion. It is also important to take into account the extent of the guarantees offered. And with good reason, it is an indispensable condition for your bank to accept this termination: your new contract must provide the same level of guarantee as the old one.

To do this, You can rely on the standardized information sheet (FSI), which describes the criteria used and the minimum guarantees that the bank requires to insure your mortgage loan. This last one was for you discount from the first simulation of your credit. If this is not the case, do not hesitate to contact your bank to receive it. It will serve as a basis for comparing the various proposals.

Other criteria to keep in mind : warranty exclusions, but also the quality of customer service. Also watch out for contracts whose premium can be revised and which can lead to unpleasant surprises.

To simplify your life, the use of a home loan insurance comparator such as Magnolia. then can be useful as you will receive personalized offers based on your profile with just a few clicks.

Once your choice is made, you will need to start preparing your file.

2. Prepare your file with all the documents to be provided

3. Termination of borrower’s insurance by using a standard letter

Have you received your new insurance contract? Iit’s about time request a delegation from your bank. For this, you must send a letter, by registered letter with acknowledgment of receipt. To the latter you will attach a copy of the new contract proposed as a replacement.

Here is an example of a letter :

[Nom et Prénom]

[Adresse]

[Code postal et ville]

[Téléphone]

[Nom de l’assureur]

[Adresse]

[Code postal et ville]

To [Lieu]that [Date]

Reference: Insurance contract no. [numéro de contrat]

Subject: Request for termination of my borrower’s insurance agreement

Dear,

Hereby, and as authorized by the Lemoine Act of 28 February 2022, I am informing you of my wish to terminate the mortgage insurance contract no. [numéro de contrat] subscribes with your company to [date de la signature du contrat de prêt ou de la prise d’effet de l’assurance].

In accordance with the terms and conditions of this contract, the termination of this contract will be effective as of [date].

Knowing the essential nature of insurance to cover my mortgage, I chose a new borrower’s insurance policy with similar guarantees. You will attach the lender’s agreement regarding this delegation and the validation of this new contract.

Thank you in advance for confirming that my request has been considered, as well as for your attention to my matter.

Please accept, madam, sir, the expressions of my distinguished sentiments.

Signature

4. Wait for your bank’s response

The bank has no no obligation to validate your request to switch borrower insuranceshe has every right to oppose it if justified.

In any case, your post will not remain a dead letter: the bank has a deadline of 10 working days to tell you about their decision.

  • If she refuses: this decision must be imperative be entitled indicating missing or non-equivalent information and/or guarantees. Your original insurance contract will not be canceled and will remain active until you submit a new application.
  • If she agrees: the bank sends you a supplement to the loan offer. She walks recalculate the total effective interest rate on your loan, the latter no longer includes insurance costs. Note: it does not have the right to change the original interest rate on the loan (whether fixed or variable) to compensate for the shortfall or the conditions set out in your offer. It also cannot charge amendment fees, analysis fees or delegation fees.
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