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If you own an apartment, it is more than likely that you also have a mortgage to cover the cost of the purchase. In fact, a large part of our salary usually goes to this expense….
At the time of contracting the mortgage in any bank, we are usually offered other complements to cover other situations: home insurance, life insurance… This was very usual that it was offered, not as a voluntary complement, but as something necessary to formalize in a total way the mortgage. Well then, you should know that with the new Mortgage Law the bank cannot impose its insurance on you when taking out the mortgage. And the fact is that, for example, taking out life insurance through the bank may be between 30% and 50% more expensive than in an insurer or even more. These data are based on a study carried out by INESE and the consulting firm Global Actuarial. To avoid taking out something that neither interests you nor is worth it, read on.
Why do banks force us to take out insurance?
Usually, banks offer us to take out their insurance policies because it is usually a way of guaranteeing that, in the event of any unforeseen event, they can recover the money from the loan granted. By having one or more insurances attached to the mortgage, such as pension plans, mortgage life insurance or home insurance, the bank guarantees its benefit in case something happens to the borrower .the bank guarantees its benefit in the event that something happens to the homeowner through the life insurance (sincethe bank appears asthe beneficiary). (since the bank appears as beneficiary) or if something should happen to the property, through the home insurance. Thus, the bank gets to insure its investment, always.
With the new legislation, yes, the bank can oblige you to take out life or home insurance, but what it cannot do is impose you to take out insurance with them. You can search and select those that interest you the most, with the best conditions you obtain.
What to take into account when taking out these insurance policies
If we negotiate a mortgage with the bank and we have to take out additional insurance, it is interesting to do so with consistency and guarantee.
Home insurance
We should be clear about the coverage contracted. In most cases, if we take out home insurance with the mortgage, we find that the coverages are associated only with the building.
As we have pointed out before, the bank tries to offer insurance that benefits them. Therefore, their interest is to protect the property, not what is inside, which are your belongings. You should be clear about what kind of coverage the insurance offers you and that it covers not only the structure but also what is inside.
Life insurance
In this case, we must identify the capital and coverages to be contracted. That is to say, what money should I invest and what will it cost me, and what will it cover. Normally, and according to the aforementioned study, life insurance policies associated with mortgages usually only cover death. We should know that for a coverage of 120,000 euros it has been proven that the cost increases between 32% and 42% with the bank.
Keep in mind that you cannot be obliged to take out certain coverages and the same applies to the capital. Analyze what you need in order to guarantee your security and that of your family, and take out what protects you and benefits you in equal parts.
New features of the Mortgage Law
As we have indicated, these changes are motivated by the new Mortgage Law. Collected in Law 5/2019, of March 15, 2009, regulating real estate credit contracts, we can find three important novelties in it:
- The “Impuesto de Actos Jurídicos Documentados” (stamp tax) is no longer charged to the persons who take out the mortgage.
- Notary, registry and agency fees are paid by the bank and not by the buyers as before.
- And the mortgage may not be associated with other products sold by the bank, although they may require it to be contracted. In this case, as we mentioned before, they can require a home insurance, but they cannot impose the provider.
With these changes implemented, at Moné we want you to get the best benefits for you when taking out your mortgage. If you take out insurance, don’t be afraid to compare and look for those that are most suitable. We can help you find the best home and life insurance. life insurance to enjoy your new home without headaches.
