Credit collateral – now the customer decides!

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Are you thinking about a mortgage? Remember that thanks to the so-called Financial Supervision Commission introduced in April 2015 U recommendations, banks can no longer require us to purchase mandatory insurance from them with the loan package. This situation has many benefits for us.

Taking a mortgage is usually a surprising cost

Taking a mortgage is usually a surprising cost

First of all, a person has to accept mentally that he buys an apartment not for 250 thousand as stated in the offer, but for more than 400 thousand because that is what he will eventually have to pay back in the loan.

In addition, when determining the details, the delectable consultant adds further expenses: commission, higher-margin due to a poor assessment of the borrower in the Credit Information Bureau, bridging insurance, low own contribution insurance, and real estate insurance. In addition, a mandatory life insurance policy with the option of credit insurance!

I remember my reactions when I was taking out a home loan myself. My rebellion was justified because I already had a life insurance policy. Why should I pay for another? Today the situation has changed.

Thanks to the so-called Financial Supervision Commission introduced in April 2015. U’s recommendation, banks can no longer require that they buy obligatory collateral for the loan with them. See exactly what the changes are and what it means to us.

The policy is your choice

The policy is your choice

Most of them offered policies with very limited insurance coverage. Instead, they generated a high commission for the bank.

Policies were taken as part of group insurance – because wholesale is cheaper. Thus, their conditions were not adapted to the individual situation of the client. It was absurd that, for example, a young person with relatively high income from a mandate contract, took a loan and paid for the mandatory life insurance pressed by the bank with the option of credit insurance in the event of losing a job.

But … one of the conditions for paying compensation was the loss of income received only from the employment contract! Such a person paid the premium, but … in practice, it was already clear from the start that he would not use the insurance because it was not tailored to his needs.

In addition, the bank was at the same time the policyholder (he paid contributions) and the sales broker, so he wanted the insurance to be paid as little compensation as possible. This is why the scope of insurance coverage was usually very limited. The problem also appeared in contentious situations when the insurer did not want to pay compensation.

The borrower could not go to court because he was not a party to the contract. The party was the bank – the contribution payer. Therefore, the customers had their hands tied because the bank was difficult to force such claims.

This situation led to absurdity. Generally speaking, the requirement to have life insurance with the option of borrower repayment insurance makes great sense. It should protect the interests of the borrower and his family, as well as the bank in the event of, for example, the borrower’s loss of work, damage to health or death. That’s why changes were needed.

Real insurance protection

bank

First of all, the bank is no longer entitled to require us to take out insurance with it on a ‘loan package with a policy’ basis. However, he may state that the risk that he would have to bear when granting us credit is too great for him and therefore he will not grant it. Then the customer will be forced to take out insurance.

Fortunately, the customer now has more room for maneuver. The bank can still offer insurance products, but first – they must be individual insurance, and secondly – it should present an offer in the form of a clearly formulated product card, which will contain all the most important features of the insurance offered to us. All this so that there is no longer a situation of forced buying a pig in a poke.

If the bank’s offer does not suit us, we have the right to thank for it and buy insurance with the option of securing the loan in the free market. Just remember that the bank has the right to determine the so-called boundary conditions, i.e. minimum insurance amount, the scope of insurance and permitted exclusions. Therefore, when looking for insurance for a loan on your own, it is best to use the help of an insurance agent. It will help you choose the product that best suits your individual requirements and the bank’s conditions.

 


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