Change of mortgage loan insurance: when and how?

By Charlotte Beydon June 14, 2022
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Although there is no law requiring the purchase of mortgage loan insurance, in practice it remains an obligation to obtain desired credit.

By imposing it, the banks offer themselves the guarantee of being reimbursed in the event of invalidity, incapacity or death. This coverage often comes at a heavy cost. Fortunately, with the Lemoine law of February 28, 2022, changing borrower insurance becomes easier. To find out more about the measures put in place, it is in the first part of this article.

In concrete terms, the steps to take out a new contract are simple. After comparing the different proposals and choosing the most suitablea case should be put together.

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

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

Change of mortgage loan insurance: changes in 2022

The enactment of the Lemoine law of February 28, 2022 is accompanied sweeping changes to home loan insurance for consumers. Focus on these simplification measures!

Possibility to change borrower insurance at any time

The end of the health questionnaire under certain conditions

All borrowers had to comply with the imperative of the health questionnaire. Intrusive and discriminating, it is today on the point of disappearing.

Indeed, from 1uh 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 desired loan repayment is expected before 60eborrower’s birthday.

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

The period of the right to be forgotten greatly reduced

The advantages of the borrower insurance changer are multiple. Closer to your needs, more suited to your current situation and your state of health, more economical… By subscribing to a new home loan insurance contract with another insurer, you have a lot to gain. Here’s how.

1. Compare home loan insurance

Before you go headlong into choosing a new insurer, remember that price should never be your sole criterion. It is essential to also take into account the extent of the guarantees offered. And for good reason, it is a sine qua non condition for your bank to accept this termination: your new contract must offer the same level of guarantee as the old one.

To do this, you can you click on the Standard Information Sheet (FSI) which details the criteria used and the minimum guarantees required by the bank to insure your mortgage. This last one was to you discount from the first simulation of your credit. If this is not the case, do not hesitate to turn to your bank to receive it. It will serve as a basis for comparing the different proposals.

Other criteria to keep in mind : warranty exclusions, but also the quality of customer service. Also beware of contracts whose premium is revisable and which can lead to unpleasant surprises.

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

Once your choice is made, you will have to get down to preparing your file.

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

3. Termination of borrower insurance using a standard letter

Have you received your new insurance contract? Itime to 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 a sample letter :

[Nom et Prénom]

[Adresse]

[Code postal et ville]

[Téléphone]

[Nom de l’assureur]

[Adresse]

[Code postal et ville]

A [Lieu]the [Date]

Reference: Insurance contract no. [numéro de contrat]

Subject: Request for termination of my borrower insurance contract

Dear,

Hereby, and as authorized by the Lemoine law of February 28, 2022, I inform you of my wish to terminate the mortgage loan insurance contract no. [numéro de contrat] subscribed with your company on [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 take effect on [date].

Knowing the essential nature of insurance to cover my mortgage, I chose new borrower insurance with equivalent guarantees. You will find attached the agreement of the lender concerning this delegation and the validation of this new contract.

Thank you in advance for confirming that my request has been taken into account, as well as for the attention given to my file.

Please accept, Madam, Sir, the expression of my distinguished sentiments.

Signature

4. Wait for your bank’s response

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

In any case, your mail does not remain a dead letter: the banking institution within 10 working days to let you know of their decision.

  • If she refuses: this decision must imperatively be justified indicating the missing or non-equivalent information and/or guarantees. Your initial insurance contract will not be terminated and will remain active until you submit a new application.
  • If she agrees: the bank will send you an addendum to the loan offer. She goes recalculate the overall effective rate of your loan, the latter no longer including the cost of insurance. Attention: it does not have the right to modify the initial rate of the loan (whether fixed or variable) to compensate for the shortfall or the conditions appearing on your offer. It cannot be a manufacturer of modification fees, analysis fees or delegation fees.
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