Home insurance with a mortgage: cost, is it necessary, documents

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Mortgage insurance is a separate type of insurance. There are some peculiarities here that you need to know about before you sign documents for a mortgage. How is a home mortgage insurance policy issued? What are the conditions and how much will it all cost? All these nuances are very disturbing for a person who is not well versed in insurance matters.

Do I need to insure an apartment in a mortgage

If you take out a mortgage, home insurance is a must. Before deciding to take this type of loan, you need to think through a lot in advance. Typically, the bank requires you to insure not only the housing itself, but also the life and performance of the borrower himself, because he will not take risks and will require you to pay for comprehensive insurance. This is how a financial organization powerfully and quite legally protects its interests.

There is a federal law regulating credit relations, "On Mortgage" dated July 16, 1998. According to it, all real estate must be insured to minimize risks.

Without insurance, a financial institution formally does not have the right to refuse a loan, but in practice such percentages are set that a person himself refuses to take money on such conditions. The bank is obliged to give the client a choice in which insurance company he will insure an apartment in a mortgage, but you cannot refuse this financial transaction.

The amount of insurance depends on the condition of the housing itself. If you decide to insure your own life, as requested by the bank, your state of he alth will be taken into account. There are a lot of nuances of mortgage insurance. Let's sort it out in order.

Mortgage apartment insurance. Features and nuances

What should be considered when signing a loan agreement for a mortgage? Banks that offer mortgages usually work with several large insurance companies. You, as a client, can choose any insurance organization, but still from the list of companies that the bank itself will indicate to you.

What other nuances are there? If the client refuses to pay for life insurance, bank employees have the right in this case to raise the interest rate for housing by 1%.

After completing all the documents, you can safely get the keys to your apartment, which you take on credit. Thus, it is also beneficial for the client. He is calm, knowing that in any unforeseen situations, the insurance company will cover all the costs that the bank needs to reimburse.

All insured events for which payments are due are specified in the contract. This list needs to be reviewed.

Types of mortgage insurance

There are several types of apartment mortgage insurance. We will consider the features of each below, and first list them:

- object of insurance;

- he alth and performance of the borrower;

- housing title;

- borrower liability insurance.

- job loss.

It is clear that the object of insurance, that is, the house or apartment itself, is insured without fail. Sudden gas explosion, fire or robbery and vandalism - all these factors that take place in our lives cannot be prevented. When assigning the amount of insurance, it plays a role whether this dwelling is new or old, whether it has wooden floors, wear and tear. Insuring a non-standard home, such as a secret house, will be more expensive than a regular apartment.

Separate mortgage conditions for those who take military mortgages. Certain benefits are provided for military personnel, and part of their loan is paid from the state treasury. Nevertheless, in this case, the military himself must pay for insurance, and benefits do not apply here.

Efficiency is better to insure when you are in poor he alth or already have chronic diseases.

Title Insurance

Let's explain in more detail what is apartment title insurance. This type of insurance is needed when there is a possibility that you will not be able to own the purchased apartment. But it's rarecases. Usually, if an apartment or house is just built and has not yet had an owner, title insurance is completely unnecessary.

Such insurance guarantees the payment of a certain amount from the insurance company in the event that some documents during the execution of the sale and purchase were incorrectly executed and your purchase will be invalid by law. Funds from the insurer are received by your credit agent, that is, the bank.

How much will the insurance company pay? The agency will pay the difference between the amount you borrowed from the bank and the real value of the property. And only if you insured the received apartment for its full value, and not for partial.

The cost of such insurance is approximately 0.5% of the total mortgage loan amount, no more. The term of payment of insurance within the framework of the law cannot exceed 3 years.

Life insurance

The main difference of such a policy is the dependence of the rate on the age of the insured person. Also, the amount will depend on factors such as the profession of the client and the general state of his he alth. If the client has an extreme hobby or works in a hazardous industry, then the percentage will also be high.

You can insure for such cases:

- temporary disability;

- disability;

- customer death.

If the client died in prison, in war or voluntarily endangering his life, then the insurance will be denied to the family of the deceased.

There are timeswhen the bank of your choice forces you to sign a life insurance contract, even if you do not consider it necessary. What to do in this case? Prepare a certificate from the hospital in advance. If you bring a certificate stating that you are in excellent he alth and do not show up to the doctor's office, the cost of such a policy will be minimal. In addition, life insurance takes into account the age of the client. If he is under 40 years old, the interest rate in many banks is lower than in cases where the client is 60 or more years old. Therefore, when applying for this type of insurance, it is advisable to ask to make a calculation in several organizations at once and choose among them the one that offers more favorable conditions.

Cost of home mortgage insurance. How to save money?

In principle, you can insure housing anywhere. But in practice, this issue is very strictly regulated by the bank. If you take out a simple consumer loan, bank employees will not particularly insist on insurance. But when signing a mortgage agreement, everything is much stricter. They often choose home insurance for mortgages at VTB 24 or at Sberbank. But where is the best place? Each bank has its advantages, but also its disadvantages.

If you choose life and home insurance with a mortgage at VTB 24, you can repay the loan not in 20 years, but in 5. At the same time, the price of insurance is reduced by 25%. There is a special program for this. However, if you choose insurance with VTB 24, you agree to pay 2 policies: forthe safety of the apartment and for their own life and he alth.

The cost of the policy in this organization depends on which program the client chooses. The client can also choose one of the proposed types of property insurance:

1. Loss of ownership.
2. Intentional or unintentional damage to property by third parties.
3. The risk of equity participation during the construction phase.

And will he want comprehensive insurance? For comprehensive insurance, all betting odds are reduced. It is possible to choose an insurance program directly on the official website of the company.

But Sberbank offers only one type of compulsory insurance - for real estate; yet other species are voluntary. But you may also be asked to purchase loss of title insurance. The average rate in this bank for this 2017 is 0.225% per year of the total amount of your loan obligations. But you can choose one of 19 other insurance organizations working together with Sberbank.

When calculating the cost of insurance for an apartment taken on a mortgage, the following factors are taken into account:

- requirements of your bank;

- loan amount;

- housing condition (technical specifications);

- total term of insurance;

- the presence of previous transactions.

You can save a lot by purchasing a policy that provides for comprehensive insurance. "VTB 24" offers to save in this way. That is, simultaneously insure all types of insurance offered by the credit institution.

But Sberbank will make a discount on the interest if the client takes out life and he alth insurance. If some organization has already insured your he alth and ability to work, contact it and insure housing there. You will definitely get a discount. A discount can be obtained if a person has changed the type of activity, and his profession is no longer included in the list of life-threatening ones. He will have to reduce insurance premiums when applying. If you calculate all these nuances, you can issue a policy on fairly favorable terms. But, despite all the discounts, apartment mortgage insurance is still a very costly investment.

Prolongation of the insurance contract

Insurance is paid for the entire period for which credit payments are calculated. But the contract is usually renegotiated every year. If all conditions remain the same, and the client is satisfied with the situation, the contract is simply prolonged. But when the situation changes in some way, certain changes are made to the document. For example, the client has already paid off a significant part of the loan, and its repayment period has decreased. Consequently, the amount insured will also decrease by some percentage.

Home insurance. Required Documents

Of course, each organization has its own conditions, but all of them are subject to the same laws of the Russian Federation for all insurers. Documents must be submitted to the insurance company correctly. If you do not have experience working with financial institutions, then be sure to consult with lawyers.

The list of documents in most cases is the same and includes:

- your TIN;

- statement;

- signed mortgage agreement;

- passport or other identity papers;

- documents confirming the ownership of housing;

- an act on the land, if you bought a house on the site.

After submitting and checking all the documents, the client pays the insurance and the first installment. It happens that it is convenient to sign a tripartite agreement. The parties in it will be your bank, you and the insurance company.

In order for the insurance company to return the money when the insured event nevertheless occurred, the following conditions must be met:

1. Bring the required documents listed on your copy of the contract.
2. Pay dues on time.
3. Notify the agency about the occurrence of an incident, if it is specified in your contract.

The insurance company has the right to refuse payment if at least one installment was not paid on time.

Cost of insurance

The cost for each type of insurance is different. And each bank, of course, has its own rates and its own nuances. If you agreed to mortgage insurance at Sberbank, the cost of the policy will be lower than at VTB-24, even if you make a deal with the same insurance company.

The formula for calculating insurance includes the interest rate on the loan and the balance of the debt. Other nuances are also taken into account.

The fee is paid only once a year. But if the client, for example, has started repairs in the purchased apartment and is unable to pay this amount at a time, it is possible to agree onits breakdown. Then the fee is divided into 4 equal parts and paid quarterly.

Insured events

In the insurance organization, there are several insured events, upon occurrence of which the bank will receive the amount specified in the contract. A home insurance policy in a mortgage in different organizations has a different cost and, accordingly, insures several possible unforeseen situations. These are usually referred to as:

- fires;

- problems with water pipes (flood);

- explosions;

- burglary;

- natural disasters;

- vandalism;

- ground subsidence;

- flooding when groundwater rises.

Some insurers also offer home mortgage insurance in case a plane hits the building. In a word, the list of insured events can be quite wide. You choose the policy that suits you. You should not pay for the entire list of insured events.

Insurance compensation

A person signs an insurance contract simultaneously with a mortgage. All terms, including the terms of damages, must be specified in the contract you signed.

With regard to life insurance, the insurance must cover the entire remaining amount of the payment. If a client falls ill or is injured, due to which he cannot work, then the insurance company must pay your borrower at this time from 50 to 70% of the due amount.

Refund

If the client has already fulfilled all his financial obligations to the bank, can heget part of the insurance back, because insurance is paid at the beginning of the year, for all 12 months? If you insured in VTB, then this is possible. To do this, you just need to terminate the contract ahead of schedule, and some of the money will be returned to you.

Since the last (2016) year, there is a legal opportunity to demand a refund through the court if the bank imposed some kind of insurance on you.