Mortgage insurance protection is obligatory in France, so we review the best deals around.
These policies cover reimbursement of the mortgage in the event of death or permanent incapacity.
The obligatory nature of mortgage insurance protection can sometimes take a bit of the shine off the otherwise generally attractive mortgage rates in France, but does at least provide peace of mind.
Average mortgage rates for a 20 year fixed interest loan are currently around 4%, whilst they are around 3.40% for a variable rate mortgage. The actual rate will depend on your profile and length of term.
Hitherto, French mortgage lenders have been able to make it a condition of any mortgage offer that you take out an insurance policy with them.
The rates of these policies depend on age and health, but are normally less than 0.5% of the outstanding loan.
So it is with some interest to learn that the French government has introduced a greater degree of competition into the whole process.
In future, mortgage lenders will not be entitled to impose their own policy upon a borrower, although the new rules do require that the alternative policy chosen must be at least as good as that offered by the lender.
Just how it is going to be able to make a full-proof comparison of the different policies seemed to escape the attention of the civil servants who drafted the new law, but it will no doubt give them the opportunity to draft more detailed regulations on just how it should all operate!
In the light of the changes, we show below the cost of insurance from twelve different insurers and broker, for a couple in their forties taking out a mortgage of €120,000 over 15 years.
The mortgage rate itself is 4%, to which the rate for the insurance must be added.
Those in their 20s and 30s could expect an insurance rate up to half of what is shown in the table.
Those with health problems would find that the rate would be higher, as it also would for smokers, and those with a serious medical problem might also be refused.
Normally, in the case of a couple, the insurers will insist that the policy is taken out in both names, and the level of the cover for each may vary according to income, age and health.
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