When you sign a mortgage to buy a property, you undertake to honour the loan received from the bank for a certain period of time. A home loan insurance protects both the bank and the applicant from unforeseen events that may make it impossible for the borrower to pay the instalments.
The loan is in fact granted at a given time, but the contract may last 5, 10, 20, 30 years and it is impossible to know in advance what events may occur over such a long period.
Only one type of insurance is mandatory when taking out a mortgage and that is the policy covering burst or fire events. With this mortgage insurance you are protected in the event of fire due to atmospheric causes, such as lightning, or gas leaks, from bursts and explosions. In the cases provided for in the policy undersigned, home loan insurance provides the refund for the damage, based on an expert assessment or the commercial value of the property. The duration of the policy and that of the mortgage coincide.
What is generally called a life insurance policy is a type of policy designed for people taking out a mortgage. This mortgage insurance protects the bank, the borrower, and also his or her heirs from unforeseen events that may occur during the borrower's lifetime. Which ones? The most drastic is obviously death. But serious illnesses or accidents leading to severe disability are also covered. All these conditions make it impossible to continue to honour the loan or make it difficult to work, and thus to find the resources to pay the instalments. This type of policy often also covers temporary loss of employment. If these conditions occur, the insurance company undertakes to pay the full amount financed, for example in the event of death, or an indemnity commensurate with the event preventing payment. This type of mortgage insurance is not compulsory.
There is no legal obligation for the borrower to take out mortgage insurance with the lending institution. It is often the bank itself that proposes to take out the policy. However, the policyholder is free to check on the insurance market whether other institutions grant cheaper rates.
Payment of the home loan insurance policy that you have decided to take out can be made in a lump sum before the loan is taken out. If the mortgage is repaid in advance of the agreed date, the amount is reimbursed for the unused period. Alternatively, it can be paid in instalments, in parallel with the instalments of the financed amount, with the addition of an interest rate.
You might also be interested in: Lake Maggiore real estate market for those who have to sell or buy a house.
Defining a certain parameter for the amount of the home mortgage insurance policy is impossible. There are so many variations: there is the variation of the insurance market, but also the characteristics of the person taking out the mortgage. The insurance company may even require a medical examination to establish the risk involved in insuring a person. On average, one can say that the amount of the home mortgage insurance policy is around 5% of the financed amount. But this is a rough estimate.
Given the general conditions governing mortgage insurance, it is always a good idea to check the conditions of your policy in detail. If you do not look in detail you may believe that you are insured against events that the insurance does not actually provide for. Or there may be details that undermine the insurance cover. A few examples? Compulsory mortgage insurance, the one that protects against burglary and fire, does not pay out if the insured is malicious, i.e. has wilfully caused fire or burglary damage to his property. This is referred to as an exclusion clause. For non-mandatory policies, then, it is good to know all the guarantees, because mortgage insurance may protect against death, but not against loss of employment.
Get in touch with your Engel & Völkers agency to find the right consultant for you.
Lun - Ven 9/13 - 14/18 Sab 9/13 Domenica - Su appuntamento
Mon - Fri 9/13 - 14/18 Sat 9/13 Sunday - On appointment
Mo - Fr 9/13 - 14/18 Sa 9/13 Sonntag - Nach Vereinbarung