Changes to French mortgage insurance from the New Year

WHAT’S HAPPENING HERE?

The so-called ‘Bourquoin’ law envisages changes to French mortgage insurance. The new legislation will allow you to swap your insurance from your lending bank to another insurer at each renewal date. The majority of borrowers choose to insure with the same institution.

WHY IS IT IMPORTANT?

From the start of next year, it will be easier to notify your lending institution that you no longer wish to use their French mortgage insurance at the end of the contract. To do that, you will have to send a letter (2 months before the renewal date) along with the new contract from your new insurer. The guarantees of the mortgage insurance will have to be at least the same as your former agreement. In theory, this will open up this rather complicated market and should play to the advantage of the loanee.

HOW DOES THIS AFFECT ME?

Mortgages in France must be accompanied by a life insurancepolicy. However with some lenders and in some cases, it is possible to obtain a loan without life insurance at lower loan to values. Examples of this would be below 50% LTV. However, this is by no means guaranteed and the banks reserve the right to insist on life insurance. With the new legislation, you could potentially obtain a lower payment rate for your mortgage insurance for your existing mortgage. You will be free to choose from an array of insurance brokers available on the market, thus potentially reducing your monthly premiums. However, French banks are hesitant to approve mortgages with life insurance from other institutions; they will not surrender without a fight and may set new conditions to the loan such as increasing the rate or the annual fees.

THE BIGGER PICTURE

The French banks are unlikely to accept an overseas mortgage cover to replace a French one and changing will be difficult. This is why, as with your French mortgage, it is very important to secure the correct product from the start to avoid unnecessary complications down the line.

 

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