Home insurance for a mortgage: cost, is it necessary, documents

Mortgage insurance is a separate type of insurance. It has its own characteristics that you need to know about before signing documents for a mortgage. How is a home insurance policy for a mortgage issued? What are the conditions and how much will it all cost? All these nuances are very disturbing for a person who is little knowledgeable in insurance matters.

Do I need to insure an apartment in a mortgage

If taken necessarily. Before deciding to take this type of loan, you need to think over a lot in advance. Usually, the bank requires insuring not only the housing itself, but also the life and working capacity of the borrower himself, because he will not take risks and will require you to pay for comprehensive insurance. This is how a financial institution powerfully and quite legally protects its interests.

There is a Federal Law regulating credit relations, "On Mortgages" of July 16, 1998. According to it, all real estate must be insured in order to minimize risks.

Without insurance, a financial institution formally does not have the right to refuse a loan, but in practice, such interest is set that a person himself refuses to take money on such conditions. The bank is obliged to provide the client with a choice in which insurance company he will insure the apartment in the mortgage, but you cannot refuse this financial transaction.

The amount of insurance depends on the condition of the home itself. If you decide to insure your own life, as the bank requests, then your health condition will be taken into account. There are a lot of nuances of mortgage insurance. Let's figure it out in order.

Apartment mortgage insurance. Features and nuances

What should be foreseen when signing a mortgage loan agreement? Banks that offer mortgages usually work with several large insurance firms. You, as a client, can choose any insurance organization, but still from the list of companies that the bank itself will indicate to you.

What other nuances are there? If the client refuses to pay for life insurance, bank employees have the right in this case to raise the interest rate for housing by 1%.

After completing all the documents, you can safely receive the keys to your apartment, which you take on credit. Thus, it is also beneficial for the client. He is calm, knowing that in any unforeseen situations the insurance company will cover all the costs that the bank needs to reimburse.

All insured events for which payments are due are specified in the contract. It is necessary to familiarize yourself with this list.

Types of mortgage insurance

There are several types of mortgage insurance for an apartment. We will consider the features of each below, and first we will list them:

Insurance object;

Borrower's health and performance;

Title deed of housing;

Borrower liability insurance.

Loss of work.

It is clear that the insurance object, that is, the house or apartment itself, is insured without fail. A sudden fire or robbery and vandalism - all these factors that take place in our life cannot be prevented. When assigning the amount of insurance, it plays a role, is it new or old, whether it has wooden floors, wear and tear. It will be more expensive to insure a non-standard dwelling, such as a secret house, than an ordinary apartment.

Separate mortgage conditions for those who take a military mortgage. For military personnel, certain benefits are provided, and part of their loan is paid from the state treasury. Nevertheless, the military must pay for insurance in this case, and the benefits do not apply here.

It is better to insure your ability to work when you have poor health or already have chronic diseases.

Title insurance

We will explain in more detail what is apartment title insurance. This type of insurance is needed when there is a possibility that you will not be able to have ownership of the purchased apartment. But these are rare cases. Usually, if an apartment or house has just been built and has not yet had an owner, it is absolutely unnecessary.

Such insurance guarantees the payment of a certain amount from the insurance company in the event that some documents were incorrectly executed during the sale and purchase and your purchase will be invalid according to the law. The funds from the insurer are received by your credit agent, that is, the bank.

How much will the insurance company pay? The agency will pay the difference between the amount you borrowed from the bank and the real cost of the home. And only if you insured the received apartment for its full cost, and not for a partial one.

The cost of such insurance is approximately 0.5% of the total amount, no more. The term for the payment of insurance within the framework of the law cannot exceed 3 years.

Life insurance

The main difference between such a policy is the dependence of the rate on the age of the insured person. Also, the amount will depend on factors such as the client's profession and the general state of his health. If the client has an extreme hobby or works in a hazardous industry, then the percentage will also be high.

You can insure for such cases:

Temporary disability;

Disability;

Death of a client.

If the client died in prison, during the war or voluntarily putting his life in danger, then the issuance of insurance to the family of the deceased will be denied.

There are times when the bank of your choice forces you to sign a life insurance contract, even if you do not consider it necessary. What to do in this case? Prepare a certificate from the hospital in advance. If you bring a certificate stating that you are in excellent health and do not show up at the doctor's office, the cost of such a policy will be minimal. In addition, life insurance takes into account the age of the client. If he is under 40, the interest rate in many banks is lower than in cases where the client is 60 or more years old. Therefore, when making out this type of insurance, it is advisable to ask to make a calculation at once in several organizations and choose among them the one that offers more favorable conditions.

The cost of home insurance for a mortgage. How to save money?

In principle, you can insure your home anywhere. But in practice, this issue is very strictly regulated by the bank. If you take out a simple consumer loan, bank employees will not insist on insurance too much. But when signing a mortgage agreement, everything is much stricter. They often choose home insurance for mortgages at VTB 24 or Sberbank. But where is it more profitable? Each bank has its advantages, but also its disadvantages.

If you choose life and home insurance with a mortgage at VTB 24, you can pay off the loan not in 20 years, but in 5. At the same time, the price of insurance is reduced by 25%. A special program is provided for this. However, if you choose insurance at VTB 24, you agree to pay 2 policies: for the safety of the apartment and for your own life and health.

The cost of the policy in this organization depends on which program the client chooses. The client can also choose one of the proposed types of property insurance:

1. Loss of ownership.
2. Willful or unintentional damage to the home by third parties.
3. Risk from participation in equity capital during the construction phase.

And would he want comprehensive insurance? For comprehensive insurance, all rate ratios have been reduced. It is possible to choose an insurance program directly on the official website of the company.

But Sberbank offers only one type of compulsory insurance - for real estate; all other types are voluntary. But you may also be asked to purchase insurance for the loss of home rights. The average rate in this bank for this 2017 is 0.225% per year of the total amount of your loan obligations. But you can choose one of 19 other insurance organizations working in conjunction with Sberbank.

When calculating the cost of insurance for an apartment taken on a mortgage, the following factors are taken into account:

Your bank's requirements;

Loan amount;

Housing condition (technical characteristics);

Total insurance period;

Presence of previous deals.

You can save a lot by purchasing a policy that provides for comprehensive insurance. VTB 24 proposes to save in this way. That is, simultaneously insure all types of insurance offered by the credit institution.

But Sberbank will make a discount on the percentage in the event that the client draws up. You will definitely be given a discount. You can get a discount if a person has changed their occupation and their profession is no longer included in the list of life-threatening ones. He will have to reduce insurance premiums when applying. If you calculate all these nuances, you can issue a policy on fairly favorable terms. But, despite all the discounts, mortgage insurance for an apartment is still a very costly investment.

Prolongation of insurance contract

Insurance is paid for the entire period for which the loan payments are calculated. But the contract is usually renegotiated every year. If all the conditions remain the same and the client is satisfied with the situation, the contract will simply be prolonged. But when the situation changes in something, then certain changes are made to the document. For example, a client has already paid off a significant portion of the loan and its maturity has decreased. Consequently, the amount of insurance will also decrease by some percentage.

Home insurance. Required documents

Of course, each organization has its own conditions, but they all obey the laws of the Russian Federation that are the same for all insurers. The documents must be submitted to the insurance company competently. If you have no experience of working with financial institutions, then be sure to consult with lawyers.

The list of documents is in most cases the same and includes:

Your TIN;

Statement;

Signed mortgage agreement;

Passport or other identity papers;

Documents confirming the ownership of housing;

Land deed if you bought a house on the site.

After submitting and checking all documents, the client pays for insurance and the first installment. It happens that it is convenient to sign a trilateral agreement. The parties in it will be your bank, you and the insurance company.

In order for the insurance company to return the money when the insured event did occur, the following conditions must be met:

1. Bring the required documents specified in your copy of the contract.
2. Pay dues on time.
3. Inform the agency about the occurrence of this or that incident, if it is specified in your contract.

The insurance company has the right to refuse payment if at least one installment was not paid on time.

Insurance cost

The cost for each type of insurance is different. And each bank, of course, has its own rates and nuances. If you have agreed to mortgage home insurance at Sberbank, the cost of the policy will be lower than at VTB-24, even if you make a deal with the same insurance company.

The formula for calculating insurance includes the interest rate on the loan and the balance of the debt. Other nuances are also taken into account.

The fee is paid only once a year. But if a client, for example, has begun repairs in a purchased apartment and is unable to pay this amount at once, you can agree on its breakdown. Then the contribution is divided into 4 equal parts and is paid quarterly.

Insured events

The insurance organization provides for several insured events, upon the occurrence of which the bank will receive the amount specified in the contract. A home insurance policy in a mortgage in different organizations has a different cost and, accordingly, insures several possible unforeseen situations. These usually include:

Problems with water pipes (flood);

Housebreaking;

Natural disasters;

Vandalism;

Subsidence of soil;

Flooding during the rise of soil water.

Some insurers also offer home mortgage insurance in case a crashing plane hits the building. In a word, the list of insured events can be quite wide. You choose the policy that you think is suitable. It is not worth paying for the entire list of insured events.

Insurance compensation

A person signs an insurance contract at the same time as a mortgage. All conditions, including the conditions for compensation for damage, must be specified in the contract you signed.

As far as life insurance is concerned, the insurance must cover the entire remaining amount of the payment. If the client is sick or injured due to which he cannot work, then the insurance company must pay your borrower from 50 to 70% of the due amount at this time.

Refund

If the client has already fulfilled all his financial obligations to the bank, can he get back part of the insurance, because insurance is paid at the beginning of the year, for all 12 months? If you were insured with VTB, then this is possible. To do this, you just need to terminate the contract ahead of schedule, and part of the money will be returned to you.

Since the last (2016) year, there is a legal opportunity to demand a refund through the court if the bank has imposed some kind of insurance on you.