We continue with this thread of posts that we started a few weeks ago... At that time we talked in general terms about with which banks link mortgages securely and what were the main mistakes they were making, today we will look at those products and the main mistakes they were making. how to undo these «ties» imposed by financial institutions.
Legislation on «mandatory» bindings»
There are already a number of consultations on these issues in the Directorate General Insurance, which bear witness to what are considered to be “facts contrary to good practice and usage in the field of private insurance”.
In fact, in 2014, a Community Directive was enacted in the European Parliament known as the «Mortgage Directive», which prohibits unfair terms in financial product contracts, including the obligation to link insurance to the bank when signing the mortgage contract.
The problem is that it is taking a long time to transpose it into Spanish law, due to the multiple banking interests in this matter.
NEW (JUNE-2019): this abusive practice no longer exists. In new mortgages, they can no longer give us a bonus when we take out insurance with them, giving us real freedom of choice of supplier that we like the most.
Home Insurance
We have already seen that this policy was intended to act as a guarantee for the bank that the loan granted will be repaid, even in the event of any serious loss to the home.
Legally, there is no obligation on the customer to The bank's obligation to take out this insurance is in any case a contractual obligation.
Life Insurance
It usually only covers the death of the insured, so it serves as a guarantee for the bank that, if any misfortune befalls the borrower, the money he or she lent will be returned to him or her.
The same applies here as in the case of household insurance: legally, there is no obligation for the bank customer to take out such insurance; it can only be imposed contractually.
How can we get rid of these «ties»?
Let us look at the two essential steps to be able to improve our current conditions:
Check the mortgage deed
We must look for the clause where the interest rate applicable to the mortgage is stated. It should appear how the fact of having these insurances subscribed with the entity lowers the rate. Two things can happen:
- If it doesn't say anything: then it's as easy as cancelling the expiry date and going for an option that suits you better.
- That says that 0,_% is added to the rate applicable to your mortgage. Then we go to the 2nd thing to do.
Calculate the cost of other home and life insurances
We need to check whether what the bank is charging us is in line with the market price. The same applies to whether the guarantees we have are the ones we need. The practice that we have checked is even home insurance without the coverage or life insurance without the disability coverage.
We must check whether:
- With the savings in insurance costs,
- Improved policy coverage (such as: better home insurance, a mediator to defend you in the event of a claim, or including disability coverage in life insurance), and
- Despite the increase in the cost of the monthly mortgage instalment
Contact us at compensates for the change in our insurances The Commission has decided that they should be managed by a broker.
We leave you again the calculator that you can use to see whether it is worthwhile or not in your particular case.
There have already been independent studies which corroborate that the life insurance are much more expensive at the bank. than in other independent companies.
At Moné Insurance and Investment We will check with you how in more than 90% of occasions, it pays off.
