When you take out a home loan, your bank will always ask you to take out the borrower’s insurance. The evolution of the legislation allows you to take out your home loan insurance with an insurer other than the one proposed by your bank. Compare the different offers, you could make savings.
6 tips to reduce the cost of your home loan insurance
It is possible to negotiate directly with the bank the insurance rate it offers you.
How can you reduce the cost of your mortgage insurance?
It is possible to compete with different insurance companies, by choosing the institution and the contract you want, when taking out a mortgage loan. Here are some ways to save money when you take out your mortgage:
- Start by negotiating the insurance rate with your bank.
- Take advantage of insurance delegation by choosing the institution of your choice.
- Compete by comparing different offers.
- Don’t forget to maintain a level of coverage at least equivalent to that offered by the bank’s group contract.
- Play on your coverage rate and that of your co-borrower.
- Don’t forget to renegotiate every year.
Negotiate a lower insurance rate with your bank.
For starters, you can ask your banker to get a better rate on your loan insurance. Banks offer “group contracts” that mutualize the risks of borrowing. These contracts may not be adapted to your profile. This means that you could get a more or less advantageous rate from another insurance company, but nothing prevents you from negotiating with the bank. The bank may sometimes give preference to loyal customers by accepting a lower rate.
Take advantage of delegated credit insurance
The bank systematically requires the borrower to take out insurance when it grants a home loan and, by default, offers the institution’s insurance. But you are free to take out insurance in another institution, after comparing the most interesting offers: this is the insurance delegation. You will, therefore, save money by choosing the right insurance.
Make the competition work for you
Do not hesitate to ask for as many quotes as possible from different companies, in order to compare the different offers and choose the most appropriate one. Always compare offers with at least the same level of guarantees to make sure you choose the most interesting one. In addition, it is also possible to negotiate with certain establishments, asking them to match the cheapest offer you have.
Choose insurance with equivalent coverage
It is possible to compare several offers quickly and easily, after filling in a certain amount of information about you. But don’t forget to choose the most competitive loan insurance, respecting the conditions of equivalence of guarantees. This is the condition imposed on you to be able to benefit from the insurance delegation, as your coverage must be optimal. You must, therefore, opt for a contract offering guarantees similar to those offered by the bank, otherwise, the bank will refuse the insurance delegation.
Playing on the coverage rate of borrowers
If you want to save money on the borrower’s insurance, you can play on the borrower’s coverage rate. A borrower’s insurance does not necessarily have to include all the guarantees against the hazards of life, it is generally a question of guaranteeing the main risks: death, total loss of autonomy, permanent disability. Other guarantees are taken out on a case-by-case basis, depending on each person’s profile. If you take out creditor and loan insurance, you can even adjust the ratios to reach 100%, but with the breakdown of your choice: it can be a 50-50% breakdown, but one can be covered at 60% and the other at 40%, or one at 70% and the other at 30%, etc.
Renegotiate mortgage insurance annually.
Finally, don’t forget to renegotiate your loan insurance at each annual due date, as it is possible to cancel your insurance on each anniversary date of the signing of your loan offer. If you think your insurance rate is too high, take advantage of this deadline to look for better rates, or take the time to discuss it with your insurer to get a lower rate.