Finally, you have it! This real estate, you dreamed of it. And here you are almost owner. Primary residence, secondary residence or investment purchase: in all cases, you will need to take out loan insurance in order to obtain your precious home loan. And you know, it weighs heavily in the total cost of your loan. Before you run through the many simulations to find loan insurance that will meet your and your banker’s wishes, take stock of what you need.  Here are our tips to be as efficient as possible in your search for borrower insurance. There the use of the Loan Calculator is important.

A contract that meets the expectations of your banker

You want to take out loan insurance in delegation. Your banker, to guarantee the good repayment of the loan that he grants you, will require that the insurance that you choose covers exactly the risks that he has selected. Your advisor will provide you with a list of guarantees that borrower insurance must include. It’s up to you to check that the loan insurance that interests you takes these guarantees into account! Don’t panic: your broker will help you.

Our advice: do not go through the general conditions of the borrower insurance contracts that interest you. Ask your broker for help: he is used to handling these requests, and will save you precious time.

Is Disability Benefit Necessary?

Loan insurance is mandatory to borrow from your bank, of course. But all the guarantees offered by borrower insurance are not all mandatory! This is the case, for example, with the invalidity guarantee. Unlike the incapacity and death guarantee, this is not always compulsory. We talk about disability when it is a permanent reduction, total or partial, of his abilities. Invalidity can be an inability to exercise a professional activity or not. This guarantee is not compulsory but generally required by bankers in the context of a purchase for a primary or secondary residence, but not necessarily for a rental investment.

Our advice:

If you are borrowing alone:

Disability guarantee: Be 100% insured, just like with the death guarantee, your bank will not give you a priori the choice.

If you are borrowing from two:

Disability guarantee: Choose your coverage rates according to the share of income brought by each. Thus, if the borrower generates 80% of household income, he can insure up to 70% in the event of a work stoppage, while the co-borrower will insure 30%.

Should you insure job loss?

The job loss guarantee allows loan repayment payments to be maintained even if the insured’s income has fallen due to unemployment. This guarantee is optional, it is generally not required by the banker.

Our advice: It’s up to you to see if this is a risk for you. This guarantee is very expensive, so you have to take the time to assess its interest.

Smoker, non-smoker?

Indeed, as you have noticed while doing borrower insurance simulations, this question has a cost! Smoking increases the monthly cost of loan insurance because it poses greater health risks to the insured than to a non-smoker. So, do you have to lie to save on your loan insurance?

Our advice: No! Any false declaration when taking out its borrower guarantee will render the contract null and void in the event of a claim. The sums borrowed are often high, do not take any risk, even if it means paying more for your contribution.

Paul Petersen