Despite the Lemoine Act, access to mortgages remains complicated beyond 50 years. Loaner insurance costs are weighing on APRs and the level of attrition has become an obstacle in 2022. Don’t give up! Here are the solutions to make a real estate project a reality when you are over 50.
Mortgage for seniors
The banks appreciate senior borrowers, although their core target remains young workers whom they will be able to attract in the long term. Over 50 years, candidates for housing loan usually have stable incomeof’savings and few family obligations.
The bank will analyze the household budget after retirement and propose a financing solution that takes into account this change in income via installment loan or ready to smooth. That monthly payment is higher at the start of the loan, and falls when the professional activity ceases. However, it is not debt capacity which is problematic, but theborrower’s insurance which must secure the credit.
Dear senior insurance!
That insurance subscription in connection with a mortgage application is not a legal obligation, but it is difficult to do without it. The banks demand it guarantee the repayment of the loaned amounts in the event of death, disability and incapacity for work. These last two guarantees cease to be valid from the age of 65, as their purpose is to cover work stoppages, or even 71 years for the most generous policies such asApril mortgage insurance.
The price of insurance depends on several parameters:
- Characteristics of the credit (type, duration, amount)
- L’borrower’s age
- His health history
- His work
- Their usual behavior (smoker or non-smoker, risky sports).
That seniors considered to be risk profiles by insurance companies given their age and statistically higher health problems. L’senior borrower insurance therefore costs more than insurance intended to cover a 30-year-old.
that costs of mortgage insurance represents on average 30 to 40% of the total cost of credit. Where a young asset with no health liabilities will pay their insurance at a rate of 0.10% (of the initial capital), a 50-year-old borrower in good health will pay a rate ofinsurance greater than 0.50%. Over the years, and in the presence of health problems, the insurance burden increases and can even reach exceed 1% of the borrowed capital.
Borrower Insurance Delegation
The law allows free choice of mortgage insurance : borrowers, regardless of their profile, have the option of taking out a external insurance instead of the group contract presented by the lending bank.
The interest? Save moneybig savings, and benefit from tailored protection, with guarantees adapted to his situation. The delegated insurances are between two and four times cheaper than bancassurance, giving a margin of up to 70% for the lender.
When APR (Global Effective Annual Rate), which is the indicator of final costs of a mortgage loan by adding up all the costs associated with obtaining financing, close to or exceeding the wear and tear, the solution is to take out one alternative insurance. Both seniors and young people have every interest in put the offers into competition through one home loan insurance comparator to get the most competitive formula.
Wear and tear as calculated is unsuitable for the sudden rise in debtor rates, we don’t know how high will interest rates rise in 2023. In this complicated context, marked by the abysmal decline in the number of loans, they are insurance delegation is the only significant saving lever for maintain the APR below the statutory ceiling.
Thanks to mortgage insurance simulationswe observe that the insurance rate for a borrower over 55, smoker or non-smoker, fluctuates between 0.37% and 0.65%. The rates vary depending on the risks that the borrower carries, which are stated in the health quiz.
Lemoine law mortgage insurance
Thanks to the questionnaire that must be completed when signing the loan insurance, the insurance company assesses risks and applies adjusted pricing, with or without a prizeor even disclaimer (back pain, psychological or psychiatric pathology). He can do that too to refuse the benefit of the insurance if he is considering too great a health risk.
However, the candidate has the right to appeal Convention of Aera (Insurance and loans with a worsening health risk), a system enforceable against banks and insurance companies that facilitates access to insurance and credit for sick or previously sick people.
Since June 2022 has Lemoine’s law entails a radical change in the regulation of mortgage insurance. It establishes 3 key measures:
- That termination at any time in the insurance agreement: since 1eh September 2022, any borrower can, regardless of the predecessor of his loan offer change borrower’s insurance at any time and for free without waiting for the due date.
- That the end of medical selection : Loans of less than €200,000 (€400,000 for a couple with an insurance ratio of 50/50 on each head) are no longer subject to the medical questionnaire if they are repaid before the borrower turns 60.
- that strengthening the right to be forgotten : former cancer patients or hepatitis C patients do not need to indicate this disease in the health questionnaire if they are in remission for at least 5 years. Since 1eh October 2022, this right applies, provided that the amount borrowed does not exceed €420,000 (instead of the previous €320,000) and that the loan is repaid before the 71stth Borrower’s birthday.
Can seniors over 50 benefit from these devices? The change of borrower insurance concerns all borrowers, regardless of their profile. To access to credit without medical choicethe loan must be repaid before the borrower turns 65, which is possible little latitude for a profile of 50 years or more. You must have sufficient debt capacity to pay high monthly payments by reducing the repayment period as much as possible and enter the segment.
The advice that prevails in all situations is to execute mortgage insurance simulations via an online comparator. It comes with another recommendation: Call a service mortgage insurance brokeran expert who knows how to guide you to the most suitable formula at the right price.
Other mortgage guarantees
And when TAEG remains higher than wear due to high cost of senior borrower insuranceare there solutions to convince the bank to provide the financing:
- that lift an investment product such as a life insurance contract for an amount at least equal to the loan amount;
- L’mortgage on another property;
- That joint guarantor via a third party who provides a guarantee in the event of non-payment
Last resort, wait for wear rates to rise again in 2023. In the meantime, we can even bet on a fall in property prices. The front wear-induced blockagescommercial banks have recently hadidea to accelerate the increase in wear and tear in 2023 to base the calculation of the legal rates on the loan offers and not on the credits actually granted. We await the verdict from the Banque de France.