Any borrower should know that when applying for a mortgage, he does not have to insure his life and health.
But nevertheless, when applying for insurance, he will be provided with more favorable conditions for a loan, as well as a reduction in the interest rate. Therefore, whether you need a mortgage insurance - everyone decides for himself. As statistics show, people are increasingly resorting to the services of banks, especially mortgages. As the results of last year showed, the number of mortgage loans has doubled.
Why do Russians need a mortgage?
First of all, borrowers liked the fact that mortgage rates have dropped, which hold today. But this affected only those who, together with the contract, carry out mortgage insurance. If the client refuses this, then the rate will accordingly be increased. Let's talk about all the details and pitfalls of this process and draw conclusions.
Should I agree to the terms of the bank?
Of course, the client may refuse to conclude a mortgage insurance contract, because this is an additional cost. It is worth knowing that such a strongly imposed service is not obligatory at all and not a single bank has the right to force a client to register it, let alone refuse to grant a mortgage. As practice shows, when refusing comprehensive insurance, the interest rate secretly increases by 0.4-1.3% per annum.
In fact, banks receive limited opportunities to reduce their own risks, which leads to an increase in interest on the loan. Although it seems that this is a small percentage of the interest, but it spills out into tens of thousands of rubles. Therefore, in most cases, it is better to pay and arrange mortgage insurance (what it is - we will consider in more detail below). This action will be much more profitable than higher bids.
Mortgage Life and Health Insurance
By agreeing to get a loan on a bank basis, you can really protect and save your family from many problems. If grief happens in the family, the borrower dies or becomes incapable of work, then no one can evict the heirs, but only on condition that the borrower has issued insurance. But to make the final decision about whether to conclude a mortgage insurance contract, only you.
Payment of insurance is made once a year throughout the entire loan term. If we talk about property title insurance, then it is only needed for three years. That is, at that time, until the statute of limitations has expired, which is allotted to challenge real estate transactions. You need to insure the title not only for secondary, but also primary housing. It all depends, again, on the borrower himself.
Do not want insurance - pay!
Many people think that VTB insurance (mortgage insurance) is a compulsory service, since earlier banks had the right to force customers to issue this service. But now everything has changed. A couple of years ago, a resolution was adopted that governs all versions of agreements between credit and insurance companies.
Since then, compulsory insurance when obtaining a mortgage loan is theoretically necessary only for collateral. Everything else is subject to customer choice. Therefore, almost all borrowers began to refuse insurance in order to save money. The banks had a lot of losses and to cover them they began to issue loans at high interest rates.Almost all credit organizations in the country used this example, and now it has become difficult to find a profitable mortgage without insurance. On average, the rate increases by 3-4%.
Comprehensive insurance
Comprehensive mortgage insurance - what is it? This is such a type of insurance, which includes all types at once. This is life insurance, and health, and collateral, as well as several other types. Such a product is much cheaper. In addition, the interest rate will be fixed throughout the loan term. As for the payments themselves, they will decrease, since they depend on the amount of debt. This is a hallmark of comprehensive insurance.
Do I need insurance at all?
According to the law, VTB insurance (mortgage insurance) is not required. This applies only to the security deposit. But banks should keep their risks to a minimum, because a mortgage is issued for a very long time at a low rate. Therefore, it is beneficial for credit organizations that borrowers insure their life, health and apartment.
As mentioned above, the title to the property makes sense to insure only for three years. This is due to the statute of limitations for disputing transactions with apartments. Banks somehow forget that there are cases of double sale, intentional or erroneous. As for the answer about the need for life insurance, it is hidden in statistics, since there are almost no failures. On the one hand, for those who did not take out insurance, banks increase interest rates, but on the other hand, borrowers are well aware that anything can happen in life, and an apartment is purchased so that children can live in it calmly. So if you take into account all the risks, then, in fact, comprehensive mortgage insurance is beneficial to both the client and the bank.
Price issue
Probably, you should not talk about each type of insurance separately, since each insurance company offers comprehensive products, which usually include three different insurance that the bank needs. Such a package costs from 0.5 to one and a half percent of the total cost of the loan. If each risk is insured separately, then it will be much more expensive.
Mortgage insurance - what is it? This is a very individual thing, it can be different, as customers are different. If the mortgage is issued for a young man working in the office and collecting stamps or butterflies, then for him insurance will cost less than for a fifty-year-old metallurgist moonlighting as a stuntman. Probably not even worth saying why.
The price of insurance also depends on the acquired property, as it acts as a pledge. For example, if a young man from the first case decided to purchase a house in an earthquake-prone zone, then insurance will cost, of course, more.
What is the size of the payment?
If the cost of housing is 3 million rubles (a million of own funds, and 2, respectively, borrowed) at a rate of 12% per annum, loan payments will amount to 22 thousand rubles. If you add insurance here, for example, in the amount of one percent of the cost of the loan, then it turns out that in the first year you will need to overpay 20 thousand rubles, which is almost equal to the monthly payment. Over time, as the basic debt decreases, the cost of insurance will decrease. On the other hand, every year the apartment bought also becomes old and therefore the size of insurance is extremely difficult to predict.
What to do when an insured event occurs?
When an insurance event occurs, it is necessary to notify the insurance company and the bank to start the insurance mechanism. The thing is that the bank will receive the payment, and therefore the issue will be decided between the bank and the insurance company, although the client, of course, is worth monitoring the situation.
What to do if, when an insured event occurs, there is not enough money to pay off the debt?
Mortgage insurance (Sberbank or any other bank) assumes that such a case simply does not happen, because before settling with the bank, the insurance company specifies the amount of debt. And the bank, for its part, will not allow at least some of the debt to be covered by the policy.
Can they refuse to pay?
Mortgage insurance - what is it, you already understood, but can an insurance company refuse to pay?
In this case, if you think you are right, contact the arbitration court. The main thing here is not to forget that the bank will be your ally. Only now it will be useless to sue if, at the time of conclusion of the insurance contract, a fact was concealed that, for whatever reason, led to the occurrence of the insurance event. In such a situation, the court will be on the side of the insurer - and the apartment will need to be sold.
Can I terminate the insurance contract?
Of course, it is possible, but then the bank will demand to pay the rest of the debt, which is provided for by the contract, and this is not such a small amount. So if you want to change the insurance company, then coordinate this with the bank and get its approval. As a rule, credit institutions try to work with large companies for which large payments are not a terrible event. Therefore, you can not worry that you will be left without payment.
In the end, I would like to give one piece of advice: it is best to find an insurance company yourself that will sell insurance on more favorable terms, because when you make such a product at a bank, it is very likely that you will overpay a sum that is quite tangible to the budget.
Conclusion
Before you take a mortgage, be sure to think about insurance. Do you need it? Or are you comfortable with an increased interest rate? What risks may arise during the loan repayment period? In addition, try to calculate how much insurance and an increased interest rate will cost you. What will be more profitable in the end? Perhaps in this case insurance is not at all scary? Think very well and only after you solve all these issues can you finally figure out whether it is worth taking out insurance.
