When making a mortgage loan, banks offer various types of insurance. It is important to know what they need, and what will happen if they refuse them. Today we consider the types of mortgage insurance and learn how necessarily the execution of the insurance policy, and what will happen if it is not extended.
Insurances are of different mandatory at the legislative level and no.
In the second case, a voluntary refusal of optional insurance may entail changes in the conditions of the mortgage agreement in favor of the Bank.
As a rule, when it comes to mortgage insurance, we are talking about two types — it is «insurance of the object of real estate» and the «life and health» of the borrower. Consider each option in more detail.
Insurance of the «Object of Real Estate» is a mandatory type of insurance. In other words, it is impossible to abandon this type of insurance. Real estate in this case is insured against the destruction and disruption of the integrity of the walls and overlap in the case of disasters and natural disasters, fires and floods, as well as the impact of lightning and falling trees and so on. In this case, the Bank assumes material responsibility and compensate for damages in unforeseen circumstances.
From this type of insurance you can refuse, but it is not useless.
Duty will not go to your relatives or children. Also, this type of insurance guarantees you to reduce the interest rate on the mortgage, which in some cases significantly reduces the size of the total amount of debt.
The refusal to extend the insurance policy can lead to an increase in the interest rate on the loan. So that it was not a surprise, it is worth paying a new policy in advance. It happens annually. As a rule, banks remind you of such a need, but it will not be superfluous to note the extreme date of acquisition of a new policy somewhere.
If you have the opportunity to pay the balance of debt ahead of schedule, then you can return the paid cash on insurance.
As a rule, it does not arise in this issue, and the insurance company returns money to the borrower.
Summarizing said, we want to say that mortgage insurance is mandatory only on the issue of real estate insurance.
Additional types of insurance are not useless, so do not consider them as an imposition by the Bank in an attempt to get extra profit with you.
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