Repayment of credit: consequences on borrower insurance
A repurchase of mortgage, or any other loan, is accompanied by the signature of a new contract. What happens then to your old insurance borrower? Should we subscribe a new one? Answers.
With respect to the first lender, a redemption of credit is equivalent to an early repayment.
This repayment of the balance therefore terminates the loan agreement, and thus the borrower insurance in progress, if it was that of the bank.
Cancel the old borrower insurance or renegotiate it
When the borrower insurance has been delegated to another insurer, it will be necessary to inform it of your loan buyback project. Several solutions may then be considered, such as the termination or renegotiation of the terms of the contract.
This contract will evolve anyway, since it will provide a new loan. This one having different characteristics, your borrower insurance will be as well. Thus, new monthly payments will be established, taking into account the elements of the new loan agreement:
- Your new contract must provide guarantees at least equivalent to the group insurance of your bank.
- Your new contract will take into account the elements of the loan, such as the new capital, the new rate, and the new term, as in a first conventional contract.
- Your new contract will take into account the evolution of your profile. For example, the fact that you are now older than when you subscribed to your previous contract can lead to an increase in your monthly payments or less extensive guarantees.
On the contrary, it can also cause a decrease in your monthly payments, if your professional situation is better for example.
It is therefore possible that your insurer no longer offers the borrower insurance most suited to your needs, your profile has evolved, as the terms of your new credit.
In addition, as a lender, the institution that buys the credit may have offered you credit insurance . This is a group insurance that you are entitled to refuse in the same way as for the initial loan. In case you want to use this possibility of insurance delegation , the procedure is identical to a conventional loan: once your application accepted by the insurer, the latter must have it validated by the bank by providing the required guarantees on the equivalence of guarantees.
Know also that since October 1, 2015, the lender must provide the insurer delegate the list of these equivalents guarantees , along with the simplified information sheet to the borrower.
In any case, it is essential to compare the offers
Before making your decision, and before you even begin the process of buying back the loan , it is therefore essential to find out about the cost and extent of the guarantees of the next loan insurance.
These two aspects can vary significantly from one offer to another, which makes the comparison essential. Attention, if the total cost of the insurance is an unavoidable element, the clauses of implementations of the guarantees are also essential.
An inexpensive insurance , but associated with high deficiency and franchise periods may indeed end up costing more than what was envisaged.
Always keep in mind that you can cancel your borrower insurance policy
Every year if you are not satisfied with yours, or if your needs change. Indeed, since 2013 and the implementation of the Hamon law, you have 12 months to cancel your contract and buy another with guarantees at least equivalent to cheaper rates. In addition, thanks to the Sapin 2 law, you can also cancel your borrower insurance policy every year.
You can study at your own pace the various proposals after a simulation of about 4 minutes. The quotes generated are stored on your personal space, allowing you to consult when and where you want.