Mortgage apartment insurance: conditions, documents

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

Probably, there is no such person who would not want to have their own comfortable housing. But, unfortunately, not everyone has the opportunity to purchase it. Therefore, in our country, many young couples are considering the option of acquiring housing on credit. When registering an apartment in a mortgage, many banks force their clients to insure the living space against loss or damage. At the same time, not only real estate is insured, but also the he alth and life of the owner of the apartment. It is often almost impossible to refuse this, because otherwise the bank will simply refuse to provide a loan.

Here, for most people, the question arises: “Is mortgage apartment insurance mandatory or not?” The answer is clear: definitely. The thing is that, according to Russian law, any property that is purchased with a mortgage must be insured. Therefore, every citizen who wants to apply for a mortgage must have a detailed understanding of real estate insurance. Let's try to understand this issue in more detail.

Is it possible to refuse insurance services whenapplying for a mortgage?

Before you take out insurance, you need to understand what mortgage apartment insurance generally provides. According to the current legislation, when applying for a mortgage, only collateral property, i.e. a house or an apartment, can be insured. But many banks, in order to reduce their own risks, force their customers to purchase additional insurance services, among which the most common are life and he alth insurance of the borrower, as well as legal transparency of the purchase / sale transaction. In case of refusal to purchase additional insurance services, financial institutions in most cases increase the mortgage interest rate. Thus, it is impossible to refuse insurance services.

What cases does the insurance cover?

Mortgage insurance protects the borrower from the following risks:

• from fire, explosion, flood and other emergencies, as a result of which the living space was severely damaged and cannot be restored;
• damage caused to the apartment by third parties;
• a financial institution has launched a new mortgage lending program with better terms.

If insurance was also issued when buying real estate on a mortgage, then in the event of any of the above cases, the balance of the loan debt is paid by the insurance company. If the borrower refused to take out insurance, then he will be obliged to fulfill all obligations stipulated by the loancontract.

Terms of mortgage insurance

As the current legislation says, insurance of a mortgage apartment must be issued before the conclusion of a loan agreement. This must be done by the borrower. He must decide on the insurance company whose services he will use, as well as conclude an insurance contract. At the same time, its validity period must match the loan period.

Apartment insurance, the cost of which depends on several factors, can be paid once a year or quarterly.

Affects the amount of insurance premiums:

• term for which the insurance contract is concluded;
• state of living area;
• number of real estate purchase/sale transactions made before.

The period of insurance can vary from 30 to 50 years, but it must coincide with the period of use of borrowed funds.

Requirements for living space when applying for insurance

Insuring an apartment on a mortgage is only allowed if the living area meets the following requirements:

• physical deterioration of the building in which the apartment is located does not exceed 60 percent;
• the borrower has an opinion on the technical condition of the housing and an act on its assessment, drawn up by a professional independent expert;
• legal cleanliness of all transactions that were previously made with the property;
• availability of all necessary documentation for the apartment.

If any of the abovepoints are not met, then the insurance company will refuse to provide its services, and, consequently, it will be impossible to get a mortgage.

What documents are needed for residential property insurance?

Every person who plans to acquire their own housing is interested in the question of what documents are needed to insure a mortgage apartment. You will need to prepare the following package of documents:

• documents for living space to be insured;
• passport of a citizen of the Russian Federation;
• an act on the technical inspection of the apartment, indicating its current value;
• extract from the Unified State Register;
• copy of technical housing plan;
• original and copy of the extract from the house book.

For title insurance, in addition to the above documents, you will need to prepare:

• document certifying the borrower's right to own living space under previous transactions;
• document confirming the fact of a purchase/sale transaction;
• certificate of state registration of the apartment;
• document confirming that the spouse does not object to the sale of housing;
• receipts for utility bills.

If, in addition to real estate, the borrower will insure his life and he alth, then a certificate of his he alth will be required.

What documents are required from the seller of the apartment?

Mortgage insurance assumes that the seller will also be required to providea certain package of documents.

The following will be required from him:

• notarized copies of all pages of the passport;
• consent of absolutely all family members to the sale of housing with the right to own an apartment;
• if the current owner of the apartment is a pensioner, then copies of PND and ND certificates will be required;
• if persons under the age of majority are registered in the apartment, a copy of the permission to sell from the guardian will be required.

It is worth noting that each insurer puts forward its own requirements for the procedure for issuing insurance, so the list of required documents may differ from the above.

Cost of insurance services

It is impossible to say unequivocally how much apartment insurance will cost. The cost depends on the insurance program, as well as the technical condition of the living space.

For example, with property insurance of housing, the cost of insurance can be from 0.3 to 1% of the value of real estate. This also takes into account the condition of the apartment, the age of the house, as well as the presence of security systems.

The cost of title insurance can range from 0.1 to 0.6 percent of the value of the property. If everything is in order with the legal cleanliness of housing, then you can count on the lowest percentage.

If, in addition to living space, the borrower also wants to insure himself, then the services of the insurer will cost from 0.7 to 1.5%. At the same time, the amount of insurance premiums is affected by the statethe he alth of the insured and the nature of his activity.

The most economical option is a comprehensive policy that includes all the services discussed earlier. Its cost can vary from 1 to 1.5 percent of the cost of the apartment.

Today, it is possible to find out exactly how much insurance for a mortgage apartment will cost. The calculator, implemented on the websites of most insurance companies, will help you with this. With it, you can determine the exact amount of insurance premiums.

Mortgage insurance process

So, how to insure an apartment? This question is asked by many people who plan to get a mortgage.

The procedure for issuing an insurance policy is as follows:

1. Find the IC offering the best deals.
2. Carefully study the insurance contract. This will avoid various pitfalls and the presence of hidden services pledged by the insurance company illegally.
3. Find out the insured events covered by the policy, as well as the amount of cash compensation and the timing of their payments.
4. Submit an application of the established form to the insurance company.
5. Pay the insurance premium of the established amount and within the terms specified in the contract.

The insurance contract is drawn up in three copies: the first remains with the insurer, you take the second, and give the third to the bank.

Where to insure property when applying for a mortgage?

These days mortgage insuranceapartments are one of the most common areas in which a large number of insurance companies are engaged, so there will be no special problems with finding an insurance company offering optimal conditions. But here it is important to understand that not all insurers work honestly, therefore, in order not to fall into the hands of scammers, it is recommended to use the services of only reliable and trusted companies. Next will be considered the largest companies involved in mortgage insurance.

Sberbank: mortgage insurance conditions

Sberbank is the largest financial organization in Russia with state support, so this company not only offers optimal insurance conditions, but is also one of the most reliable.

Insurance for an apartment with a mortgage in Sberbank is issued on the following conditions:

• Term of insurance - up to 30 years;
• the amount of insurance premiums - from 0.3 to 0.8%;
• the amount insured is not less than the remaining debt and not more than the cost of living space;
• insurance programs - housing and comprehensive.

Insurance for an apartment with a mortgage in Sberbank is issued no more than five days, so you do not have to spend a lot of time and you can quickly purchase an apartment on credit.

VTB Real Estate Insurance

VTB is the second largest bank in Russia in terms of mortgage lending.

Insurance of a mortgage apartment in this financial institution is carried out on the following conditions:

• Term of insurance - up to 30 years;
• the amount of insurance premiums - from 0.5 to 1%;
• insurance amount - not more than the market value of living space;
• insurance programs - comprehensive.

The procedure for issuing an insurance policy at VTB takes no more than one week.

Collecting an insurance policy at Rosgosstrakh

Another indisputable market leader in the field of mortgage insurance is Rosgosstrakh. She offers her clients the following conditions:

• Term of insurance - up to 50 years;
• the amount of insurance premiums - from 0.12 to 0.65%;
• insurance amount - not more than the market value of living space;
• insurance programs - housing and comprehensive.

Insurance services from the Rosgosstrakh company are much cheaper, since many more factors are taken into account when calculating the cost of the policy, including the location of the apartment or house.

What to do in case of an insured event?

We talked about all the nuances associated with mortgage apartment insurance. Now it remains only to consider the procedure for the occurrence of an insured event. To receive monetary compensation you must:

1. In the event of any force majeure, you must first report the incident to the competent authorities.
2. Notify the insurance company of the accident and report the cause of the accident.
3. Prepare a package of documents for the affected apartment.

If everything is done in accordance with the law and on time, then the obligation to repay the debt falls on the insurance company, and the borrower receives monetary compensation. It should be noted that the debt must be repaid by the insurer before the expiration of the loan agreement. Therefore, in order to avoid any problems, always read the terms of the agreement.