When taking out your mortgage, you purchased mortgage loan insurance. This, proposed by your bank, guarantees the repayment by the mortgage loan insurance of the monthly payments of the credit due to death, invalidity, incapacity for work or loss of a job . This is group insurance, the principle of which is to pool risks between all policyholders.
However, if the cost of your home loan insurance seems too high, you can use an insurance delegation to take out individual insurance. Individual insurance must, however, provide at least the same guarantees as to the group contract of the bank.
Home loan: can you take out individual insurance?
The answer is yes. Since September 1, 2010, the entry into force of the law, you can choose a mortgage loan insurance different from that offered by your bank. The Law (2014) goes further by allowing borrowers who are already insured to change insurance during the first year of subscription. And the Bourquin amendment marks a new stage by allowing you to change mortgage insurance on each anniversary date of the contract. You are therefore free to choose borrower insurance different from that offered by the bank.
You then have the choice between group insurance offered by your bank and individual insurance issued by another establishment.
Why change home loan insurance?
Because changing borrower insurance can save you money: you can compare mortgage loan insurance offers based on the guarantees and prices advertised. Depending on your profile (profession, age, etc.), individual insurance can be more advantageous than group insurance. This is generally calculated on the amount remaining due and changes with the repayment of the loan. In other words, the more you pay off the loan, the lower the monthly insurance payments.
So, even if you have already taken out a borrower insurance contract with your bank, you can delegate mortgage loan insurance. By doing so, you benefit from individual insurance at an advantageous rate (subject to the equivalence of guarantees offered by the bank).
NB: Be careful, the total cost of insurance and the rate are not the only elements to compare when you decide to make a change in borrower insurance in 2020. Group insurance is sometimes more attractive depending on the profiles and the levels of guarantee provided by the bank.
Change borrower insurance?
Change home loan insurance before 1 year
The Hamon law allows you to change home loan insurance in the first year of your subscription. The law already made it possible to choose personal borrower insurance, other than group insurance for your bank: this is the delegation of mortgage loan insurance. The Hamon law goes further and allows you to terminate your borrower insurance in the first year of your subscription and opt for insurance at a favorable rate. You have 12 months to change insurance.
Important: remember, your new loan insurance must offer at least the same guarantees as to your current home loan insurance.
The Hamon law, therefore, allows you to make savings on your loan insurance or find the borrower insurance most suited to your profile and your needs with the best insurance rate.
Change home loan insurance after 1 year
After this period of 1 year, you can change borrower insurance with the 2 law: indeed, the amendment authorizes you to change loan insurance on the anniversary of your contract. You can, therefore, change borrower insurance after one year, but also change mortgage insurance after 2 years whenever you want!
The conditions for changing borrower insurance with the amendment are the same as for the Lagarde law and the Hamon law: your future borrower insurance must offer guarantees at least equivalent to your current loan insurance. Of course, you can also opt for extended coverage by choosing borrower insurance that offers guarantees superior to yours.
Change home loan insurance after credit renegotiation
The mortgage loan renegotiation takes place with your bank: it then offers you better conditions for your current mortgage: for example a better mortgage rate. Your bank makes an amendment to your mortgage loan contract: there is no new contract, but the contract initially signed which continues with a new rate.
Changing borrower insurance is then interesting after a renegotiation of mortgage: it allows you to make even more savings on the total cost of your loan. Whether you have purchased group insurance or individual mortgage insurance, the process will be the same: to change borrower insurance following a renegotiation of mortgage, you will have to respect the principles of the Law if you have purchased your borrower insurance less than a year ago or meet the deadlines set out under law (therefore on each anniversary date of the contract) if you signed your mortgage loan insurance contract there is more than one year.
Change home loan insurance after a loan buyout
If you buy back credit, you will also have to change your mortgage insurance: in fact, you should not confuse buying credit and renegotiating a home loan. With the loan repurchase, a new bank redeems your mortgage by making a prepayment. You get a new contract, with its new borrower insurance, perhaps group insurance from your new bank.
So how do you change home loan insurance after buying a home loan? You can do this in three ways: by refusing group insurance with the law which allows the delegation of insurance, or within 12 months from the subscription to your new borrower insurance under the Hamon law, or still on each anniversary date of the mortgage loan insurance contract as part of the Bourquin amendment.
Compare home loan insurance with a loan insurance broker
Have you decided to change your home loan insurance in 2020? As a reminder, Pangloss can assist you by comparing for you the best rates in individual insurance thanks to our mortgage loan insurance comparator. Once the form is completed, our mortgage loan insurance brokers will contact you within 48 hours to offer you mortgage loan insurance tailored to your project and offer the same guarantees as to your current contract.