You have benefited from a mortgage for several months or years and it is systematically backed by mortgage insurance, or borrower insurance.
How to cancel your mortgage insurance to save money? We give you all the explanations in this article!
Can you cancel your mortgage insurance?
Mortgage loan insurance is required by banks to grant you a loan, but also very useful for homeowners who have their deadlines honored in the event of disability, incapacity, death and more rarely loss of employment.
This insurance being essential for both the banker and the borrower, there is therefore no question of terminating it strictly speaking. In fact, you can cancel your current mortgage loan insurance on the sole condition that you take out another with at least equivalent guarantees.
Termination of borrower insurance is therefore used to change insurer, either to pay less, or to benefit from additional guarantees that were not taken out at the outset.
When to cancel borrower insurance?
You can cancel your borrower insurance to compete at one of the following two times:
- With the Lagarde law, within 12 months after the acceptance of your mortgage offer and at least 15 days before the expiry date of your contract
- With the Hamon law, each year, on the anniversary date of your mortgage insurance contract, with a minimum notice of two months
It is necessary, in both cases, to follow a strict procedure, since your current insurer, whether it is the bank where you took out your mortgage or another insurance organization, must verify the equivalence of guarantees.
Please note that only the equivalence of guarantees can be opposed to you to refuse the change of insurer. All other grounds are considered illegal. Likewise, no costs can be claimed from you by your former insurer for this termination.
Can termination of insurance be refused?
It is possible that the delegation of insurance is refused, either because the termination was not made within the times indicated, or because the guarantees are not equivalent.
In this case, the establishment which currently insures you must notify you of its refusal within a maximum period of 10 days following your request for termination. The refusal must be motivated and supported.
If the guarantees of the future insurer are equivalent and the cancellation request has been made on time, you will receive an acceptance concerning the delegation of insurance. This acceptance must be notified to you within 10 days and mention the date of entry into force of the new contract.
In addition, your bank must issue you an endorsement concerning your mortgage. This is issued free of charge and mentions your new maturities, including borrower insurance, as well as the new APR (Annualized Global Effective Rate).
How to find a new mortgage insurance contract?
To cancel your mortgage loan insurance, it is necessary to find a new one, and that the insurer accepts this risk. For this, it will be based on the capital remaining due on the day of the subscription of the new contract, but also on your age and your state of health.
It is important to understand that this is not a “transfer” but rather a termination followed by a new subscription. Thus, the risk to be insured may have changed between the initial contract and the new contract. You will therefore need to complete the same formalities to insure yourself, and in particular return a health questionnaire and undergo medical examinations if necessary.
However, the rewards are worth the effort, especially if you are in the first half of your loan. Indeed, these are significant savings that you can achieve, of the order of several tens of euros per month, and therefore hundreds or even thousands of euros over the remaining term of your mortgage.
To find the best value for money loan insurance contract, we strongly recommend that you use an online comparator. It allows you to compete with many organizations in a few clicks and without obligation, to easily access the best offers on the market.
Remember to check the guarantees offered, the waiting periods and any age limits of the new borrower insurance contract before committing yourself.