Home loan repurchase: what becomes of loan insurance?

The repurchase of mortgage can be an interesting solution to decrease your monthly payments or the duration of your mortgage. Your borrower insurance must then be reviewed to adapt to your new borrowing conditions.

Loan insurance ends with credit

Loan insurance ends with credit

If you redeem your home loan and you had taken out the home loan insurance contract offered by your bank, it ends automatically with the extinction of the loan. Indeed, a repurchase of mortgage is in fact a prepayment and full of what you still owe to the bank.

The special case of insurance delegation

The special case of insurance delegation

However, it is not compulsory to take out borrower insurance with the lending institution : perhaps you had found at the time of taking out the loan a more attractive mortgage insurance contract, for example with from your own insurer or through a credit insurance broker. In this case, the insurance contract is not terminated. However, you must inform the insurer of the conditions of your new loan.

Advantages also for loan insurance

Advantages also for loan insurance

This will allow your insurer to change your contract. Indeed, it is likely that the decrease in your monthly repayments – because it is generally the purpose of a buyout of mortgage – allows it to also lower the amount of the premium of the mortgage loan insurance. It is also likely, if your personal or professional situation has changed, that he modifies your contract in this direction.

Changing home loan insurance when buying a home loan is possible

Changing home loan insurance when buying a home loan is possible

If the changes proposed by your insurer do not suit you, if for example it intends to increase contributions due to your aging, you can then compete and turn to other organizations. Only one condition to fulfill: that the contract subscribed meets the minimum guarantee requirements of the organization that bought your mortgage. These minimum requirements must be clearly indicated to you when you take out the loan, via a standardized form. This makes it easier for you to compete and choose the most economical solution for you.

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