Borrower insurance: soon more transparency?

Borrower insurance: soon more transparency?

Mortgage loan insurance
Borrower insurance: the contract prices will be communicated over 8 years


If the termination at any time of borrower insurance does not seem on the agenda, good news has fallen for consumers: the players in mortgage insurance have agreed to introduce a tool to '' inform about the contract prices over 8 years. Data that invites even more to compare mortgage insurance to save money.
A new indicator giving the costs of borrower insurance over 8 years

This is one more step towards the transparency of loan insurance contracts. The Financial Sector Advisory Committee (CCSF) issued a press release on October 12 explaining that banks, insurers and consumer associations had found common ground on this issue. Thus, a new tool for comparing mortgage insurance contracts should be implemented. This announcement did not fail to delight consumer associations. As for brokers, they wished to recall that they already provided such a figure as part of their duty to advise.

"At the end of the discussions, all the professionals agree on the possibility of communicating [the rates of loan insurance], if this is done in a homogeneous way on the market, over a period of 8 years", can - read in the press release.
8 years: the average holding period of a loan in France

But why 8 years? Because this corresponds to the average duration of holding a loan in France. Indeed, many households proceed to the early repayment of their loan, in particular by the repurchase of credit.

In addition, the distribution of premiums is sometimes very uneven. "On the question of the choice of the pricing of the premiums of the borrower insurance contracts, the Committee noted that the interest for the borrower depends on many parameters, in particular the envisaged time of conservation of the purchased good", finds- we still in the press release.

Loan term and borrower insurance payment method: two key factors in a loan

Because the length of detention is a crucial factor in the process of contraction of a credit. Indeed, the reimbursement at the "initial capital", the most common method of calculation, allows the borrower to distribute the cost of borrower insurance over all the monthly payments. And therefore not having to pay its cost over the first years of the loan. This is all the more useful if he wishes to proceed with a borrower delegation, which consists in changing establishment for mortgage loan insurance.

But by opting for the "outstanding capital" method of calculation, the borrower will on the contrary pay his insurance at a higher price during the first third of the contract, in particular during the first year, when the capital to be reimbursed is more. important. However, it will pay around 20% less than the initial capital for the same guarantees.
Compare mortgage insurance to save money

So, depending on the length of the loan, your choice of payment for borrower insurance will differ for the most optimal option. And with this new comparison tool, the CCSF aims to stimulate competition in the creditor insurance sector, more than 80% owned by banks.

In addition, the prices charged by banks are very high compared to those of insurers. Indeed, in an environment of historically low interest rates, the margins realized by the banks on the loan are almost zero. They therefore fall back on loan insurance with high rates. To save money, it is therefore wise to compare insurance policies and to delegate insurance. In a few minutes, you will have access to the best prices on the market and be able to save thousands of euros.