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Take out insurance with the mortgage? They can’t force you but there are times when it matters

Banks usually condition the approval of a loan to the contracting of insurance. A requirement to which the entity cannot oblige the client, but that sometimes, despite the cost involvedYes, it is usually of interest to the user to lower the mortgage interest.

The first thing to calculate to know whether or not to take out insurance is how much the interest on the mortgage would be lowered, for which you will have to read the details in detail bonus conditions. An aspect “especially relevant, because if they are subscribed and later canceled, the applied rate will rise in the points established in the mortgage deed”, they point out from the financial comparator HelpMyCash.

Thus, the key question to ask is whether they really make the mortgage cheaper. To do this, it will be necessary to calculate how much that loan would cost, whether or not those policies are signed. There may be cases in which hiring the home insurance proposed by the entity would make the mortgage cheaper, although as this would probably become more expensive at each annual renewal, the price of the subsidized offer could in the end be somewhat higher.

Another issue is how much the insurance would cost and how it would be paid, that is, if it has an annual premium, with annual installments, or a single premium, with full payment for several years. “If they are of annual premium, it is necessary to bear in mind that the insurer could raise the price of the policy each year, although the client would have the right not to renew it, in which case they would lose the corresponding bonus “, they explain. You also have to look at the coverage reflected in those policies and see if they interest the client enough to contract the insurance .

Experts recommend, however, comparing the offer of mortgage loans of all entities, whether they have associated policies or not. In the latter case, there are banks that offer mortgages in which it is not necessary to take out insurance for get a competitive interest. “Their rates may be higher than those offered by other entities that do ask to subscribe their policies, but since it is not essential to sign their insurance, the loans they offer may be cheaper in the long run,” they highlight.

FORCE TO CONTRACT

Conditioning the granting of a credit to the signing of policies is prohibited by the Insurance Distribution LawHowever, despite the complaints, the banks continue forcing customers to hire one to approve the loan. In fact, 55% of life insurance is acquired in Spain at the time of contracting a mortgage with a bank, being the entities of our country those that have the most of the business of life insurance linked to this type of credit, according to data from the consultancy YouGov.

The contracting of an insurance policy was a necessary condition to formalize the granting of a mortgage or a personal loan for 59% of the clients. A percentage that increases to 74% in the case of mortgages and which stands at 53% in the case of consumer loans, as can be seen from the Study on the contracting of insurance linked to mortgages and loans carried out by the General Council of Associations of Mediators.

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