The subject that we begin to talk about today is important enough to divide it into two different entries. The reason why we want to deal with it is the abuse exercised on individual customers, self-employed and companies by banks and financial institutions.
Today we will introduce the subject and, in the second part, we will talk about the commitments imposed and how to get rid of the linked mortgage insurance in order to choose the one we like the most.
Main insurance policies linked to the mortgage loan
The usual banking practice is to improve the interest rate of the loan conditioned to the contracting of a series of insurances. Not to mention other additional contracts (salary, bills, pension plans). This means that, if not taken out, the interest rate is worse, so that the monthly payment rises.
NEW (JUNE-2019): this abusive practice has ceased to be carried out. In new mortgages they can no longer give us a bonus when subscribing insurance with them, giving us real freedom to choose the provider we like the most.
A mortgage is usually attached to a mortgage, as required by the bank:
- Damage insurance: either home, business or SME insurance, depending on who the borrower is (it aims to protect the lender in the event of a loss occurring to the mortgaged property).
- Life insurance: on the borrower(s) (the purpose of which is also to protect the lender against the death of the borrower(s) and the risk of not receiving back the amount lent to the client).
- A pension plan: only to increase customer “loyalty” (or rather: “bind”). In this case, this demand is completely unfounded.
Why do financial institutions make mistakes?
In our opinion, the errors lie in:
- To force customers to take out such insurance, given that Article 5 of Law 26/2006 on Private Insurance and Reinsurance Mediation prohibits banks from “directly or indirectly imposing the conclusion of an insurance contract”.
- Require them to contract only with them.
This has led consumers to be outraged by the abusive insurance prices offered by their bank.
The fact is that if a bank can force the customer to take out insurance with it, it will do so at the price it sees fit, and not at a competitive market price.
The latter is not what we say. This article in the CincoDías newspaper highlights banking pressures and high insurance prices.
Our top tip: COMPARE
For this reason, our advice is to COMPARE what these insurances would cost us with a professional insurance brokerage 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 clients who save more than 300 € per year thanks to it.
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 of 700 euros that in another company may cost 300 euros (more than 50% cheaper!).more than 50% cheaper!). Although the fee may go up by 20 € per month, it compensates enormously for this change.
Through this link you can calculate the savings we are talking about by knowing the amount pending amortization 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 in the market.
