Although taking out mortgage insurance in Switzerland is a poor option because of the cost and inadequate coverage compared to other products (loss of income, etc.), borrower’s insurance is compulsory in France when taking out a mortgage. It helps provide protection for the borrower, his family and the bank if there is a fall in income caused by death, disability (partial or total) or job loss (optional).
This type of insurance is required by the banks, and can be taken out jointly (from the lending bank’s group insurance) or individually (from the insurer of your choice) on the condition that this option is equivalent to joint cover and is taken out within a specific timeframe (before or after a loan is obtained, in accordance with the Lagarde, Hamon, and Sapin 2/Bourquin laws).
The cost (i.e., the insurance rate*), independent of the credit rate (i.e., the interest rate*), will vary according to : age, duration, health status and personal behaviour (sport, work-related activities, risky countries, for example). It covers repayment of the loan (in part or in full) according to the percentage of cover taken out (from 100% to 200%).
The insurance can be purchased on the same date the loan offer is signed (the most common situation) or during the loan period to adapt to your situation (if you are asked to switch insurance). The length of time it is valid for can’t change, which means that you will be protected under the same terms, regardless of how your personal and professional situations change.
The application process can’t be completed until you’ve filled in a medical questionnaire, and includes a qualifying period where you won’t be able to make a claim, and exclusions. If you have a medical problem (which is the case for 15% of borrowers in France), the AREAS Convention enables you to take out insurance for a loan with an increased health risk under certain conditions
The “job loss” option is not included when taking out borrower’s insurance, unlike the death and disability benefits, which are compulsory. This cover is usually for employees on fixed-term contracts (FTCs), who are entitled to unemployment benefits.
Although looking for and obtaining a mortgage is still our core business, as part of Prêt Immo Conseils business activities, our firm will help you with the process for taking out this insurance in partnership with your chosen bank. If required, our firm can also refer you to its network of partners.
*OEAR (the Overall Effective Annual Rate) includes interest rate + insurance rate + application fees + guarantee charges + brokerage costs + any mandatory costs payable for obtaining a loan.