How to modify the quotas of your borrower insurance (Photo credits: Adobe Stock – )
Because life is full of unforeseen events, you may need to modify the insured quotas under your home loan insurance. But is it possible? How to proceed ?
What are the insured quotas?
This is the percentage of the mortgage that will be covered by the insurance in the event of default by one of the borrowers.
They can be distributed freely between the parties, provided that their addition reaches at least 100% and at most 200% of the mortgage.
Thus, for a mortgage of 100,000 euros, borrower A can be covered up to 70% and borrower B up to 30%.
If borrower A were to default – for example due to disability following an accident – the insurance would cover 70% of the loan, ie 70,000 euros.
Borrower B should for his part repay the remaining 30,000 euros.
Conversely, the two borrowers can each be covered at 100%. In the event of failure of one of the two, the borrower insurance would then cover the entire credit, i.e. 100,000 euros.
How to modify the insured quotas in the course of credit?
A mortgage generally commits you for a fairly long period, between 15 and 25 years and of course many changes can occur, which would make it necessary to modify the insured quotas at the start when you bought your property.
This is theoretically possible, provided you obtain the agreement of the lending institution and that of the insurance company.
First scenario, you want to increase the insured quotas. You have a good chance of obtaining the approval of the various parties to modify your contract since from the point of view of the bank you will be even better covered, and from the point of view of the insurance company you will pay higher monthly payments.
Things get more complicated if you want to revise the quotas downwards or if one of the borrowers wants to take over all of the mortgage and therefore the borrower insurance – for example in the event of divorce.
In this case, if your bank and/or your insurance company refuse the changes you are requesting, you can turn to the termination of your contract to take out a new one better suited to your new situation.
Stephanne Coignard ([email protected])