6 tips to save money on mortgage insurance

What kind of insurance do you need to apply for a mortgage?

You can insure different objects.

• Real estate. A house, apartment, apartment, room or plot - the bank issues money for them.
• Life and health. The policy guarantees payments if the borrower becomes unable to work.
• Title. It is issued in order to reduce the risks of transactions in the secondary market and preserve the ownership of the borrower.

By law, the borrower must buy only one policy - for collateral. Without it, the bank simply will not execute the contract. The other two types of insurance are voluntary, but waiving them may affect on the loan rate.

Compulsory insurance is beneficial not only to the bank, but also to those who take out a mortgage. For example, with her client will receive payments in the event of a fire, gas explosion, flood or earthquake. The policy is issued for structural elements - floor, walls, windows, front door. In this case, the decoration of the apartment, furniture and household appliances are not insured - separate programs are offered for them.

You need to renew your insurance once a year. If you refuse it, the bank may charge a penalty or cancel the contract, demanding a return of the debt or raising the interest rate. Specific conditions are prescribed at the conclusion of the transaction.

What is the cost of insurance

It is calculated individually. The amount of the loan primarily affects the insurance of collateral - the higher it is, the more expensive the policy will be. It also takes into account the gender and age of the borrower, the type of property, the material of the walls, the year the house was built. Compulsory insurance is reissued annually, which means that as the loan is repaid, its price will decrease.

Life and health insurance takes into account the age and gender of the borrower. The older the person, the more expensive the policy will cost. Men, as a rule, have to pay a little more for the service than women. In addition, the profession of a person can affect the price. If he works in a hazardous industry, the insurance rate can grow.

How not to overpay for a policy

1. Compare prices on the financial marketplace

They may vary from insurance company to insurance company. To find out the conditions, it is not necessary to call all organizations. You can use the services of a financial marketplace. There are calculators on such sites, with the help of which it is easy to calculate how much the policy will cost from different insurers. You can issue it immediately on the marketplace. You don’t have to go anywhere for this - you can pay for the policy online. After that, the documents will be sent to your e-mail, and they can be sent to the bank.

2. Take advantage of the "cool off period"

Applying for a loan is an important and sometimes stressful process. Therefore, sometimes borrowers buy the first policy that comes across, just to get a mortgage faster. The “cooling off period” is the period during which you can terminate the contract with the insurance company and return the money. It makes up the minimum 14 days. It is worth resorting to it if you have found a better offer or realized that additional services have been imposed on you. To cancel insurance, you must write a written application.

If the “cooling off period” has passed, you can also cancel the policy. But then the company has the right keep part of the cost of insurance, if it is prescribed in the terms of the contract.

3. Renew your policy with another company

Usually, insurance is renewed once a year, and therefore you can renew the contract on more favorable terms or change the company. Each of them has its own rates. For example, for a young woman with a debt of 3 million rubles, the amount for two insurances - real estate and life - can be from 6 to 9 thousand rubles a year. And for a middle-aged man with the same loan - from 12 to 17 thousand. Sometimes banks increase interest on loans when changing insurers. But such actions illegal. The interest rate can only change during the period that the new policy does not cover.

4. Recalculate the amount of insurance payments

When renewing the contract, always check the amount of the loan balance. If you made additional payments, it will be less, which will affect the price of insurance. By the way, with the full repayment of the mortgage, the money for the unused insurance period can I return.

Be careful when refinancing. When making a contract with the old bank, it is sometimes possible to keep the old insurance. When moving to a new document, you will have to terminate. If the insurance company is accredited by the bank of your choice, you can issue a new agreement. If not, you will have to go to another organization.

5. Opt out of title insurance

This policy is voluntary, but you still need it when buying a second home. It protects in situations where there are hidden owners and heirs claiming real estate. An example is the sale of an apartment bought in marriage. Even if one spouse is indicated in the documents of sale, the second is still legal can claim for housing. If, after buying a property, the court declared the transaction invalid, if you have a policy, there is a chance to return the money. Such disputes are usually arise within the first three years after purchase. But if a person has lived in an apartment for many years, title insurance can be waived.

6. Calculate whether it is profitable to take out life and health insurance

You may not use it, but there is a possibility that the bank will raise the mortgage rate - such conditions are prescribed in the contract. Ask to see a monthly payment schedule, taking into account the increased rate. So you will understand what the overpayment on the loan will be. In some cases, it exceeds the amount of insurance, and then it is unprofitable to refuse the policy. It is also important to consider that all risks are borne by the borrower. For example, if he becomes seriously ill and can no longer work, the family will still have to pay the mortgage.