Mortgage insurance is required when buying real estate on credit.In granting the loan borrower banks put additional requirement - purchase mortgage insurance policy.
Federal Law "On Mortgage (mortgage)" requires mandatory insurance of property from damage and destruction.When a loan, many banks are insisting on additional or comprehensive insurance to minimize their risks.
Why do we need insurance?
Mortgage - a loan for the maximum term under the minimum percentage.Therefore, banks tend to reduce the risk of bad debts and offer a comprehensive mortgage insurance.The subject property is a guarantee of security, that is flat.But for the full protection of the banks prefer that the customer has insured his life and health, as well as the risk of loss of property rights.
For customers who have refused additional policies often provide higher interest rates.But most borrowers do understand that in life anything can happen, and voluntarily enter into additional contracts life and health insurance.
As for title insurance, it applies not only to housing, bought on the secondary market, but also to the new building.In practice known case of problems with the previous owners of the apartments, and the double sale of apartments under construction.This type of insurance newfound owner needs only the first 3 years before the expiry of a limitation period for challenging real estate transactions.
specifics of mortgage insurance
mortgage insurance has some peculiarities.The contract with the insurance company is in favor of the lender, that is a beneficiary, who will receive the indemnity is a bank, not the borrower.Therefore, the sum insured, as a rule, corresponds to the size of the loan.
amount of debt is gradually reduced, and consequently reduced the cost of the policy.In the insurance case the bank receives compensation in the amount of the granted loan and homeowner loses the money invested on their own, including the initial payment.To avoid this, you can execute the contract of insurance for the full value of the apartment.Then it will be the beneficiary owner of its part of the sum insured.
Such conditions are offered by many companies, including the "VTB Insurance".Mortgage insurance can be a protection for both the bank and the borrower.
Benefits lending
primarily mortgage insurance protects the bank against losses that may arise due to the borrower's default.It plays an important role in situations where the sale of the collateral is not possible or does not cover the entire amount of the debt.
Due to the existence of a mortgage insurance becomes available to more people at a reduced percentage.
Property Insurance
Mortgage insurance primarily involves the protection of the collateral.The object of insurance in this case may make design elements and interior decoration.
One of the major players in this market is a "Rosgosstrakh".Mortgage insurance in this company includes a wide list of possible insurance claims.Usually it is a fire, explosion, flooding, lightning, natural disasters, illegal actions of third parties, design defects and so on.
Life Insurance
Some banks insist on life insurance and health of the borrower.This insurance includes the following risks:
- temporary loss of the insured disability;
- permanent disability and the establishment of disability;
- death.
When making policy may need a medical examination.If this will be detected threats to life and health of the client, the cost of insurance can be increased.
Title Insurance This type of insurance against the risk of loss of property rights as a part of the comprehensive insurance.The Borrower shall insure the risk of loss of property rights, if it is challenged by a third party.Under current conditions, this service is very relevant and may protect against fraud by the seller of property.In some cases, check the legal purity of the home can be difficult.
cost and conditions
Many insurers carry mortgage insurance.Reviews indicate that the final cost will vary depending on the company.It is not necessary to enter into a contract with the first sentence of the insurance, it is better to learn about the conditions and the price of even a few offices.The bank offers the borrower a list of trusted insurers, which consists of the largest players in the market, for example, "VTB Insurance".
Mortgage insurance is carried out all over the actions of the mortgage contract.The insurance sum is set equal to the sum of the loan, increased by another 10%.At the request of the borrower's property can be insured for the full value.
annually necessary to pay insurance premiums.Their size will decrease as loan repayment.Also, the value of the insurance premium depends on the insured amount, the value is the age of the insured, the type of credit agreement and the acquired property, the number of borrowers.
cost of insurance policy is determined individually, depending on the factors mentioned above.For the borrower's mortgage insurance will cost about 1.5-2% of the sum insured.This is the price of comprehensive insurance, which covers practically all possible risks.
insurance contract may be executed on the day after the submission of documents and statements.
actions when the insured event
If the insured event, the first duty of the borrower - to notify the insurance company and the bank.Thus, the insurance mechanism will be launched.As the beneficiary, that is, those who receive money, a creditor bank, all issues will be resolved at the level of the financial institutions.However, a borrower is interested in the progress of the process.
Many borrowers are afraid that the money paid by the insurance company, is not enough for full coverage of the debt.Banking and Insurance professionals argue that the emergence of such a situation is impossible.With the resumption of the insurance contract the company agreed to the amount of debt that the entire stock was included in the policy.
Can I opt out of insurance
Mortgage insurance - the requirement is quite reasonable.However, many borrowers tend to save money and avoid the insurance contract.If the initial failure threatens to increase the interest rate on the loan, the refusal to pay the regular insurance premium can have more serious consequences.
Banks stipulate the possibility of sudden failure of the insurance in the loan agreement.In such cases, it provides for sanctions, and pretty tough.The bank may simply require a one-time return of all remaining debt.
If desired, the borrower can change the insurance company.A new candidate should be agreed with the bank.Lending institutions do not cooperate with all insurance companies, and only the largest.Therefore, the new insurer must also be included in the approved list.
both the bank and the borrower does not need the protection of an emergency.It can provide mortgage insurance.Reviews borrowers indicate that the choice of insurer is not less important than the choice of bank and credit conditions.
