Building wealth on credit is the great advantage of rental investment through mortgage loans. An attractive long-term perspective that pushes many individuals to take the plunge each year. But not all investments are created equal, and if profitability depends on the attractiveness of the property and its valuation for resale, it is also impacted by the cost of loan insurance.
Investing in real estate on credit, a great opportunity
Financial investment or real estate investment? This is the dilemma faced by individuals who want to grow their savings and diversify their income. Both involve their risks, but the second has serious assets to tip the scales in its favor. Investing in real estate can indeed be done on credit, by taking out a loan whose monthly payments will be reimbursed in whole or in part by the rents collected.
In addition, systems such as the Pinel law, the Denormandie law or the Censi-Bouvard amendment make it possible to benefit from tax deductions spread over several years before realizing a gain on resale by taking advantage of the increase in value goods in major cities (+ 60% in Lyon in ten years). Not to mention the current low rates (1.29% on average) which make credit financing very attractive.
Group insurance or delegation of insurance?
As with a traditional property purchase, an investor who takes out a loan must insure it. Since 2010, it has been possible to call on the insurance delegation to bring competition into borrower insurance: it is no longer compulsory to take out insurance with the lending institution.
Within the framework of this group contract, the risks are pooled, and the guarantees as well as the premiums are uniform. This is less advantageous in many cases than insurance delegation, which allows competition to play to the full in order to obtain personalized proposals, adapted to each particular case.
How delegation of insurance improves profitability
The quality of an investment is judged by its rate of return, depending in particular on rents but also on the cost of investment, which ranks as borrower insurance. Using the insurance delegation makes it possible to obtain a very precise study of the investor’s situation, and therefore an adapted proposal, at the fairest mortgage loan insurance rate.
In the case, for example, of a 45-year-old couple making an investment under the Pinel regime with a mortgage up to $ 120,000, it will be possible to save several tens of euros per month thanks to the insurance delegation compared to a proposal in group loan insurance contract issued by the lending institution. An economy far from negligible over the duration of the operation especially as a real estate investment is made over the long term, it is possible to take full advantage of the decreasing monthly payments.