Mortgage insurance: reviews. Comprehensive mortgage insurance

Mortgage insurance is necessary when buying real estate on credit. When issuing a loan to a borrower, banks are required to purchase a mortgage insurance policy.

The federal law "On Mortgage (Real Estate Pledge)" requires the performance of compulsory property insurance against damage and destruction. When issuing a loan, many banks insist on additional or comprehensive insurance to minimize their own risks.

Why do I need insurance?

Mortgage - a loan for a maximum period of minimum interest. Therefore, banks are trying to reduce the risk of non-return of debt and offer comprehensive mortgage insurance. The object of property insurance is a mortgage, that is, an apartment. But for full protection, banks prefer that the client insure his life and health, as well as the risk of loss of ownership.

For customers who have refused additional policies, often there are higher interest rates. But most often borrowers themselves understand that everything happens in life, and voluntarily conclude additional life and health insurance contracts .

As for title insurance, it applies not only to housing purchased on the secondary market, but also to new buildings. In practice, there are also cases of problems with the previous owners of apartments, and double sales of apartments under construction. In this type of insurance, the new owner only needs the first 3 years, before the expiry of the limitation period for challenging real estate transactions.

Specificity of mortgage insurance

Mortgage insurance has some features. The contract with the insurance company is in favor of the creditor, that is, the beneficiary, who will receive the insurance compensation, is the bank, and not the borrower. Therefore, the insurance amount, as a rule, corresponds to the size of the loan.

The amount of debt is gradually decreasing, and accordingly the cost of the policy is reduced. In the event of an insured event, the bank receives a refund in the amount of the loan issued, and the owner of the housing loses funds invested independently, including the initial payment. To prevent this from happening, you can arrange an insurance contract for the full cost of the apartment. Then its owner will become the beneficiary for its part of the sum insured.

Such conditions are offered by many companies, including VTB Insurance. Mortgage insurance can become a protection for both the bank and the borrower.

Lending Benefits

First of all, mortgage loan insurance protects the bank from losses that may arise due to the borrower's failure to fulfill its obligations. This plays a special role in situations where the sale of collateral is impossible or does not cover the entire amount of debt.

Due to the existence of insurance mortgage is available to more people at a reduced interest.

Property insurance

Mortgage insurance primarily involves the protection of collateral. The object of insurance in this case can be structural elements and interior decoration of the premises.

One of the major players in this market is Rosgosstrakh. Mortgage insurance in this company includes the widest possible list of insured events. Usually it is a fire, explosion, flooding, lightning stroke, natural disaster, illegal actions of third parties, structural defects and so on.

Life insurance

Some banks insist on life and health insurance of the borrower. Such insurance includes the following risks:

• Temporary loss of work ability by the insured person;
• Permanent disability and disability;
• death.

When making a policy, you may need a medical examination. If at the same time factors that threaten the life and health of the client are found, the cost of insurance can be increased.

Title Insurance

This type of insurance against the risk of loss of ownership is also included in the comprehensive insurance program. The borrower insures the risk of loss of ownership, if it is challenged by third parties. In modern conditions, this service is very relevant and can protect against fraud from the seller of housing. In some cases, it is difficult to verify the legal cleanliness of the home.

Cost and conditions

Many insurers carry out mortgage insurance. Feedback indicates that the final cost varies depending on the company. It is not necessary to conclude an agreement with the first proposed insurance, it is better to find out about the conditions and the price at least in several offices. The bank provides the borrower with a list of trusted insurers, which includes the largest market players, for example, VTB Insurance.

Mortgage insurance is carried out throughout the validity of the mortgage contract. The insurance amount is set equal to the amount of the loan received, increased by another 10%. At the request of the borrower, real estate can be insured at full cost.

Every year it is necessary to pay insurance premiums. Their size will decrease as the loan is paid. Also, the amount of the insurance premium directly depends on the insured amount, the age of the insured, the type of the loan contract and the acquired real estate, the number of borrowers is important.

The cost of insurance policy is determined individually, depending on the above factors. For the borrower, mortgage insurance will cost about 1.5-2% of the sum insured. This is the price of comprehensive insurance covering almost all possible risks.

The insurance contract can be executed the day after the submission of documents and application.

Actions in the event of an insured event

If an insurance event occurred, the borrower's first obligation is to notify the insurance company and the bank about it. Thus, the insurance mechanism will be launched. Since the beneficiary, that is, the one who receives the money, is a creditor bank, then all issues will be resolved at the level of financial institutions. Nevertheless, the borrower should be interested in the progress of the process.

Many borrowers fear that the money paid by the insurance company is not enough to cover the entire debt. Banking and insurance employees argue that the emergence of such a situation is impossible. When the insurance contract is renewed, the companies will agree on the amount of the debt, so that all its volume is included in the policy.

Can I opt out of insurance

Mortgage insurance is a requirement that is well-founded. Nevertheless, many borrowers are trying to save money and avoid making an insurance contract. If the initial refusal threatens to increase the interest rate on the loan, the refusal to pay the next insurance premium may have more serious consequences.

Banks stipulate the possibility of a sudden waiver of insurance in a loan agreement. For such cases sanctions are provided, and rather rigid. The bank can simply demand a one-time return of the entire remaining amount of debt.

If desired, the borrower can change the insurance company. The new candidate must be agreed with the bank. Credit institutions cooperate not with all insurance companies, but only with the largest. Therefore, the new insurer must also be included in the approved list.

Both the bank and the borrower need protection is not an unforeseen event. It can provide mortgage insurance. Reviews borrowers show that the choice of the insurer is no less important than the choice of the bank and the terms of the loan.