The topic we start talking about today is important enough to divide it into two separate entries. The reason we want to deal with it is the abuse of private clients, freelancers and companies by banks and financial institutions.
Today we will introduce the topic and, in the second part, we will talk about the commitments imposed and how to get rid of linked mortgage insurances to choose the one we like best.
Main insurances linked to the mortgage loan
Standard banking practice involves improve the interest rate of the loan conditional on taking out a series of insurance policies. Not to mention other additional contracts (salary, bills, pension plans). This means that, if not taken out, the interest rate is worse, so the monthly instalment rises.
NEW (JUNE-2019)This abusive practice is no longer used. In new mortgages, they can no longer give us a bonus when we take out insurance with them, giving us real freedom to choose the provider we like best.
A mortgage is usually attached to a mortgage, as required by the bank:
- An insurance policy of damage: whether home, business or SME, depending on who the borrower is (it aims to protect the lender against a loss occurring to the mortgaged property).
- An insurance policy of lifeThe lender is also protected against the death of the borrower(s) and the risk of not receiving back the amount lent to the customer.
- A pension plan: only for the sole purpose of «tying» the customer to the company. In this case, this demand is completely unfounded.
Why do financial institutions get it wrong?
In our opinion, the errors are located in:
- First of all, force customers to take out such insurance, whereas Article 5 of Law 26/2006 on Private Insurance and Reinsurance Mediation prohibits banks from «directly or indirectly impose the conclusion of an insurance contract”.”.
- Require them to contract only with them..
This has led to consumer indignation over the abusive insurance rates offered by your bank.
If a bank can force the customer to take out insurance with it, it will do so at the price it sees fit, not at a competitive market price.
The latter is not for us to say. This newspaper article FiveDays highlights the banking pressures and high insurance prices.
Our top tip: COMPARE
For this reason, our advice is to COMPARE how much these insurances would cost you with a Insurance brokerage professional and the cost of remaining in the bank.
Don't just compare mortgage interest rates between banks, but also compare whether insurance should be linked or not. Every year we get customers who save more than €300 per year as a result.
Why do we say this? Because despite the fact that they can raise the differential by 0.1% or even 0.4%, we find ourselves with life insurance policies of 700 € that in another company may cost 300 € (more than the cheapest 50%!!!!). Although the monthly fee may increase by €20 per month, it is well worth the change.
Through this link you can calculate the savings we are talking about by knowing the amount pending repayment and the interest rate of the mortgage with its corresponding differentials.
If you want to count on our help in this process, contact us, and choose among the best insurances on the market.
