Law could cut cost of mortgage cover

HOME owners may be able to cut the cost of their mortgage insurance as MPs have backed proposals to allow borrowers to change their insurer each year rather than only being able to do it in the year after the loan is agreed.

The move is part of the new Loi Sapin 2 finance law, which is due to finish going through parliament by the end of the year, and which would make mortgage insurance as easy to change as car cover.
Savings could be significant as many borrowers are tied into deals signed with the bank that holds their mortgage, when using a different finance house could cut costs dramatically.

Banks are supposed to allow customers to change insurer within the first year if they find equivalent cover but consumer champion UFC Que Choisir said they were dragging their feet and refusing to accept other products as equivalent.
Maël Bernier, of comparison website Meilleurtaux, said that customers could be in line for savings averaging €2,000 and that, with mortgage rates at rock bottom, could make a
big difference for borrowers.

She gave the example of a 38-year-old couple who had borrowed €200,000 over 20 years: paying assurance groupe insurance at 0.36% (with 50% coverage for each) it would cost €21,600 – but changing to assurance déléguée at 0.15% would cost just €9,000.

Being able to renegotiate each year would also help people with health problems or cancer survivors as they could benefit from the ‘right to forget’.

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