Insurance can be expensive for a borrower. But the law allows him to change his contract from 2022 if he wishes.
As interest rates rise, the cost of home loans has skyrocketed. But even within the costs of your credit it is possible to save: this is the case of borrower’s insurance, which can represent a large part of the price of the loan.
Example: a couple wants to borrow 250,000 euros, at a rate of 4%. His credit will cost him around 190,000 euros. But in this price we find 45,000 euros of insurance.
However, since February 2022 and the Lemoine law, insurance can be taken out at the bank that grants the loan, but not only: the consumer is free to take out insurance elsewhere, or to change it during the course of a loan. There can be savings: in the case of the couple mentioned, alternative insurance can cost less than 7,000 euros, or 38,000 euros
The banks are trying to force their hand
The only condition: that the guarantees are equivalent. The bank cannot then refuse the credit because you take out insurance elsewhere, as underlined by maître Marc Mouxel, lawyer in Angers at Consilium Avocats:
The real estate credit contract cannot be subject to insurance obligation. This could be of interest to the General Directorate for the Repression of Fraud, this is a violation of the Consumer Code, in particular of article 132-1, since it is a tied sale. This also deprives the consumer of substantial savings, because he has optional guarantees in the contract that are not necessary.”
Banks are in fact trying to circumvent the law in various ways, in particular by inserting clauses that alternative insurers cannot offer, so as to prevent customers from signing elsewhere. In this way pensioners or stay-at-home parents obtained guarantees against job loss, which no other insurer could guarantee.
The only strategy to ensure freedom of movement without getting angry with your bank: take out insurance with the latter, and have it verified by a broker before signing. You will therefore remain free to modify your contract if you wish.