Is mortgage life insurance mandatory?
The life insurance of a mortgage is mandatory. We tell you if the life insurance of a mortgage is mandatory.
By law it is not mandatory to take out life insurance to be granted a mortgage, although in practice, bank entities require this requirement for approval.
Resorting to a mortgage is many times the only possible option for all those who want to acquire a home. In these cases, the new owners may arise multiple doubts and questions before opting for subscribing to the bank. One of these most common questions is if it is mandatory to hire life insurance with the mortgage, a doubt that usually leads to enough confusion and misunderstandings to the consumer. We answer it in this guide.
It is not strange that suspicion arises when hiring this banking product, given the abusive practices of banks in this regard that the law has had to correct. And, policies like home usually come into play when obtaining their own house. On the other hand, life insurance can have a less obvious relationship with mortgages and still many users end up taking out these policies at the suggestion of their financial institution.
It is important to note that if you are going to sign a mortgage, The only insurance that they can ask you in a mandatory is that of damage in case of fire. The reason? That this will cover the so -called property damage in case of fire, with an amount equal to the cost of reconstruction of the house. In those cases, the bank with which the insurance and the mortgage have been signed will be responsible for what the repair costs.
Life insurance when a mortgage is hired can seem to seem an indispensable requirement, since it is very common by banking entities to offer this type of products. But as a consumer it is important to know that nothing can force you to subscribe life insurance with your bank. As we have already seen, current legislation contemplates that no bank can force its customers to link life insurance or any other policy (which the entity markets) to its mortgage loan.
Moreover, the user ultimately has the right to claim before the courts if this situation occurs. The problem is that most people are not aware of it. But In no case can the bank force the client to contract this product, especially if it raises it as a requirement to grant the mortgage. Because in that case I would be using its own weapons to have some advantage and thus place their products in the most convenient way.
Thus, it is clear that The client has the right to choose who to subscribe insurance And the law supports it. It cannot be imposed either general or directly to the debtor of a mortgage loan to hire insurance linked to it. The only case where it proceeds is in those where the mortgage is used in the form of cards, derivatives and others.
Advantages of hiring housing insurance with the mortgage
Once the legislation is known and when choosing, it will be best to assess other offers and alternative services to which the bank offers, using a life insurance comparator such as success.com.
We must also Assess whether the life insurance offered can be advantageous in each case. In addition, in the event that a possible disability occurs or the loan holder died, with an insurance of this type would protect his family, guaranteeing future economic stability. Also, when hiring this life policy linked to the mortgage You can make the loan be bunned and there are more advantageous conditions for the user in the aforementioned situations.
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How long is it mandatory to have a mortgage life insurance
From the law mortgage 2019, not being required hire a life insurance with the mortgage, there is no period either required associated with this type of insurance.
What about the mortgage if you don't have life insurance
In the case of not hiring a life insurance For you mortgage, and You die or suffer a permanent disability, the bank will continue to claim you or your heirs the payment of the pending debt.
How sure is mandatory in a mortgage
The only insurance that they can ask you in a mandatory is that of damage in case of fire. The reason? That this will cover the so -called property damage in case of fire, with an amount equal to the cost of reconstruction of the house. In those cases, the bank with which the insurance and the mortgage have been signed will be responsible for what the repair costs.
Is it necessary to hire life insurance to have a good mortgage?
Although most entities ask, a few offer good conditions without them. In many cases, if you want to get a good mortgage, it is necessary to associate it with commercialized life insurance through the bank itself. And if it is not done (or that policy is not maintained during the validity of the credit), the entity rises the interest rate, which makes monthly payments more.
But is it possible to get an attractive mortgage without meeting this requirement? Although most banks require signing one of their life insurance to opt for a competitive interest, a few offer good conditions without hiring this product.
About 70% of Spanish financial entities ask to subscribe life insurance to get attractive mortgage. And in return, they reduce the interest applied in an average of 0.40 percentage points, a bonus that will disappear if this requirement is not met.
In practice, this makes, in general, this product must be hired to enjoy good conditions. Or what is the same, that an average premium of between 200 and 400 euros per year must be paid (it may be higher depending on the client profile) throughout the deadline of the mortgage loan, which could be more expensive in each annual renewal. In addition, in most cases, to get a good interest, you also have to domicile payroll and subscribe home insurance with the entity.
Something more than 30 % of banks operating in our country do not bonate their mortgages for hiring life insurance. And among them there are some that offer good conditions. But do these mortgages go more account than those with life insurance? To find out, of course, the applicant must make numbers. Likewise, it should not be allowed to coat with a small interest, since it is possible that a mortgage with a somewhat high and without insurance guy goes to account than another with a lower interest bonus for hiring this product.
It is possible, however, that the opposite happens: that a mortgage is found with associated life insurance that is cheaper than another that does not include it. For this reason, it is important to go to both banks that bonate the interest in meeting this requirement and to entities that do not. In this way, the applicant may compare the price of the different options and may assess what would come out more on account.
It is also advisable to consider the utility that could have a life insurance associated with the mortgage. And it is that if you want to protect the heirs (the debt would be resulted in case the holder dies), subscribing this policy could be convenient. In that case, therefore, it would be necessary to value whether it would be accountable to hire that insurance with the bank (and enjoy a bonus in the interest rate) or if it would be better to subscribe it for free and have the freedom to go to another insurer if the premium rose in the annual renewal.
For more information I call 695033558 or take a look at our page on mortgages.
Juan Rosado
CEO
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