The Hamon Law allowed to modify the Consumer Code on borrower insurance contracts. Thanks to this reform, the customer who has taken out insurance for his mortgage can now freely terminate his contract within one year from the signature of his loan offer. If the borrower finds cheaper insurance and guarantees equivalent to those of the previous contract, he can change insurance in the first year.
This approach has only financial advantages since the Law prohibits any billing by the bank of rider fees and file study fees. In addition, the costs of any medical examinations are fully covered by the insurance company. Remember that an insurance delegation, that is to say other than that proposed by your bank saves an average of € 15,000 on the total cost of credit.
Think about the right to annual cancellation
In December 2016, the Sapin 2 law, whose aim is “to reduce and prevent the fight against corruption related to the modernization of life from an economic point of view”, had in particular plans to allow borrowers to terminate their loan insurance contracts, each year, for the benefit of the insurer and the contract of their choice, provided that this contract presents a level of cover equivalent to the insurance contract proposed by the lending institution. Following the rejection of this article in this law by the Constitutional Council, the Senate finally succeeded in introducing this right through the Bourquin amendment. Specifically, every borrower agree insurance contracts since 1 March 2017 may be terminated each year, the main maturity. From 1 January 2018, all insurance contracts borrower agree before 1 March 2017 may be terminated at the main maturity. It will therefore be necessary to think of the two months’ notice and obtain the agreement of substitution of the lending institution on the new contract sufficiently early.
Choose a good broker
By opting for the renegotiation of credit insurance with the bank, the objective is to take out a new contract that is cheaper and more suitable, in terms of guarantees, to the customer’s profile. Being advised and helped by a broker saves considerable time and money. His experience in the business allows him to meet the needs of the borrower and find him the most competitive offers on the market.
Buying your home loan from a competing credit institution is the ideal way to lower the cost of loan insurance . When renegotiating the rate of its mortgage credit, it is also necessary to negotiate the subscription of a new borrower insurance contract. Thanks to the Lagarde Law, the bank no longer has the right to refuse if the contract transmitted fulfills the standards of equivalence of guarantees. This solution is the most profitable since it allows:
- Reduction of the mortgage rate
- Reduction of the remaining reimbursement for the monthly payments or lower monthly payment
- Lower interest cost over the total loan period
- Recalculate insurance contributions with individual borrower insurance