Development director, co-founder of the AMinsure insurance agency Mark Zislin answers:
The terms of mortgage insurance are always dictated by the bank that issues the mortgage loan. The requirements of banks differ from each other. Most often, it is necessary to insure the structural elements of the premises. It is also often necessary to insure the life and health of the borrower. Insurance of interior decoration and engineering equipment, as a rule, is not required for a mortgage, but remains at the discretion of the bank. It happens that the same bank imposes different insurance requirements on different borrowers. This depends on the type of mortgaged property, its value, the profession of the borrower and a number of other factors.
In order for the person applying for a mortgage to understand what insurance is required, you need to read the mortgage agreement or ask your loan manager at the bank. Often banks themselves offer mortgage insurance through their insurance divisions. But their insurance conditions are not always favorable. I recommend that you always compare the insurance conditions offered by the bank with those offered by the insurance agent you trust. You can also request mortgage insurance terms from different insurance companies and choose the most profitable option.
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Can a bank force you to take out mortgage insurance?
The managing partner of the “Unified City Service “Assistance to Shareholders” Zhanna Malis answers:
According to current legislation, property under a mortgage is subject to insurance in accordance with the mortgage agreement. If there are no other insurance provisions in the mortgage agreement, the citizen carries out insurance at his own expense. Thus, insurance of interior decoration, utilities and equipment will be mandatory for a mortgage only if it is specified in the mortgage agreement. In practice, there are often formulations about comprehensive property insurance, which will include insurance:
- structural elements (these are load-bearing and non-load-bearing walls, partitions, ceilings, balconies and loggias, including glazing, etc.);
- interior decoration (that is, all types of painting and plastering work, finishing the ceiling and walls with various materials, including wallpaper, flooring, as well as interior doors);
- engineering networks and equipment (this is a heating system, sewerage, gas supply, power supply, etc.).
As a rule, the mortgage agreement lists specific objects that are subject to mortgage insurance. When insuring mortgage property, you must remember that interior decoration, utility networks and equipment are not included in the number of structural elements and belong to other insured risks. Therefore, if it is necessary to insure them under a mortgage agreement, they must be specifically stated in the mortgage insurance agreement. Otherwise, your obligation will not be considered fulfilled in full, which is a violation of the obligation on your part.
At the same time, it is worth remembering that the requirement for a citizen to insure property exclusively with the specified company is invalid and contrary to antimonopoly legislation. Therefore, a citizen independently chooses an insurance company to provide this insurance.
How to refuse insurance when taking out a mortgage?
Can I get back the overpaid interest if I repay early?
What it is?
Comprehensive mortgage insurance is a special program that motivates the borrower to obtain a set of protection against various mortgage risks.
For example, one-time registration of life insurance, title and mortgage.
Since, in accordance with Article 31 of the Federal Law No. 102 “On Mortgages,” property insurance, meaning the collateral - an apartment or house purchased with a mortgage - is mandatory.
And life and title insurance is a voluntary type of mortgage insurance. Title insurance is the protection of a transaction from legal impurity.
For example, if one of the former owners has claims and challenges the transaction, citing that he was in prison, and his interests were not taken into account at the time of registration of the purchase and sale.
It is in the interests of banking institutions to minimize the risks of possible non-payment of debt on the part of the borrower. Therefore, banks and insurance companies are developing special programs that motivate borrowers to take out all types of insurance : both mandatory and voluntary.
Do you need mortgage insurance? ►►
Thus, comprehensive insurance was created, which provides complete security for both parties to the credit transaction in the event of insured events.
Legal General Director Alexandra Brodelshchikova answers:
The Federal Law “On Mortgage (Pledge of Real Estate)” establishes the borrower’s obligation to insure the property pledged under the mortgage. In this case, only insurance of the structural part of the housing (walls, floor, ceiling, balcony, etc.) is mandatory.
As for the interior decoration, utilities and equipment, this issue depends on the borrower himself. It's his right. He may refuse the offered insurance against the risk of damage to these items. There is no legal obligation on the borrower here.
If the bank imposes this service, its actions can be appealed to Rospotrebnadzor, the court and the prosecutor's office. To do this, it is necessary to prepare a claim (if the borrower goes to court) or a complaint (if he applies to other government bodies) and attach to it documents and other evidence confirming the bank’s imposition of the service. Such evidence includes: copies of the loan agreement, insurance agreement, written testimony, etc. Having established a violation, these authorities will order the bank to stop violating consumer rights.
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Mortgage loan insurance
Content
1. What does mortgage insurance consist of? 2. List of documents for insurance. 3. Where to insure and the cost of insurance. 4. Terms of insurance.
The topic of home insurance always arises in transactions involving the purchase of housing using a mortgage. There is a federal law on mortgages dated July 16, 1998 No. 102-FZ, which states that the buyer must insure real estate that is pledged to the bank. There are many nuances in mortgage insurance, one of which is the choice of insurance company. So, what to look for when insuring and applying for an insurance policy.
1. What does mortgage insurance consist of? Standard mortgage insurance includes:
1. Life and health insurance of the borrower. 2. Insurance of the object. 3. Title insurance, if needed.
The need for each type of insurance is specified in the loan agreement.
Life and health insurance of the borrower.
According to Russian laws, life and health insurance is not required, but almost all banks insist on life insurance for the borrower. If we do not insure life and health, the bank increases the mortgage interest rate. The logic of the bank is completely obvious: if something happens to the borrower, then from whom will the money be received? The borrower must be interested in insurance. He must think about where his family will get money to pay off the mortgage if he becomes unable to work due to an accident or illness.
Almost all insurance companies insure the risk of the borrower's death or non-working disability resulting from illness or accident. If an insured event occurs, the mortgage payments will be paid by the insurance company. The amount of insurance payment on the loan in case of death or disability of groups 1 and 2 will be 100% of the insured amount. Here is the main answer to the question why you need life insurance when taking out a mortgage.
Property insurance.
Property insurance is mandatory. The purchased property is pledged to the bank, so insurance is mandatory. Insurance agents warn that the bank needs insurance of the property (apartment or house), since the beneficiary of the insurance is the bank. In the event of damage to the purchased property, the insured amounts are received not by the insurer, but by the bank.
Title Insurance.
Title insurance is a type of financial protection against loss of ownership of a property that is held as collateral by the bank under a mortgage loan. The primary statute of limitations for real estate transactions is three years. It is difficult to conduct a 100% clean transaction. In case of claims from third parties, title insurance is carried out on your apartment. How can claims from third parties arise?
If you buy an apartment on the secondary housing market, then it already has its own history of transferring rights from one owner to another. No one is guaranteed that previous mortgages with maternity capital will not come out, where mandatory shares or something else were not properly allocated by law. If the apartment has a long history, the more difficult it is to check all the owners. And if one of them sues you, then title insurance is your guarantee against loss of ownership of the property.
The title is most often insured at the request of the bank. For Sber, title insurance is not required; VTB asks for title insurance for the first three years after purchase. The need for each type of insurance is specified in the loan agreement.
Do I need to insure the co-borrower? Different banks have different policies on this matter. Sberbank insures only the main borrower, Bank St. Petersburg insures 70/30 (70% of the main borrower and 30% of the co-borrower).
2. List of necessary documents and data for insurance.
The list of required documents for Sberbank is minimal.
1. Passport of the policyholder. 2. Mortgage amount, number and date of the loan agreement. 3. Application form completed and signed by the borrower (for life insurance). 4. Approval for the issuance of a mortgage or the loan agreement itself (if the borrower is from out of town, that is, is not registered in St. Petersburg and Lo).
When filling out the form, you must indicate your medical information. Many clients ask: do I need to indicate all my diseases? It's better to indicate. If you have a disability, there is no need to hide it, the medical department of the insurance company will still check it. In this case, he may refuse insurance, or increase the amount of insurance or add a clause that the consequences of this disease are not an insured event.
If a client asks: I have a serious heart condition, can I not indicate this on the questionnaire? My answer is this: You don’t have to indicate this, but if suddenly an insured event occurs due to this disease, and the insurance company always conducts an inspection before paying out and, most likely, will dig up the medical documents it needs and prove that the insured event occurred as a result of this disease , then in this case you will not receive insurance. And the bank will demand mortgage payments from you, since it has a questionnaire in its hands where the borrower did not indicate this disease.
Insurance companies request a large list of documents for title insurance. The insurance company will have to pay the cost of the apartment if the deal is challenged in court. Therefore, the insurance company is extremely careful and meticulous when it comes to title insurance.
3. The cost of insurance in different banks may be different.
What does the insurer need to know? The larger the insurance company, the more reliable it is and the greater the chance that it will recognize the insured event and pay the insurance claims. These are the companies Reso, Ingostrakh, Sber insurance. One of the best in terms of reliability and payments is the Sberbank insurance company. Sber insurance services are not the cheapest on the market, but it is reliable, it has a wide list of insurance cases, and it actually pays for them.
If the company is small and has low prices, then this is a reason to be wary and think.
Read the text of the policy or insurance contract carefully. It lists the insured risks. The main thing is to understand what insurance risks are included in your insurance. Everyone wants to get cheaper life insurance for their mortgage and save on insurance. As a result, they receive a policy with only one risk - accident. The most common cause of death is still disease. And he is suing because of the refusal to pay due to the fact that the disease is not insured without any prospects. The moral here is this: an insurance company is chosen not based on the cheapness of insurance, but on reliability and insurance conditions.
Example. With a mortgage of approximately 6 million rubles, the cost of insurance from the Sberbank insurance company was about 20 thousand rubles, from Reso it was 16 thousand rubles. At the same time, the policyholder found a small insurance company that asked for about 5.5 thousand rubles for similar insurance. If the price of insurance is more than three times lower than the market average, then this does not mean anything good. Will this company pay compensation in the event of an insured event or not? Most likely no.
What factors affect the cost of insurance?
The cost of an insurance policy depends on several factors:
• Interest rate of the bank that issued the loan; • Loan size; • Gender of the borrower: insurance companies offer more favorable rates for women, insurance is more expensive for men; • Age of the borrower; • Client's weight: important in the cost of a life insurance policy; • Profession; • Property: house or apartment. The cost of home insurance is higher.
The cost of mortgage insurance depends primarily on the size of the mortgage loan. A mortgage of 1 million rubles and 16 million rubles are two big differences in the cost of insurance.
It is more expensive for men to insure than for women, because according to statistics, men over 45 are much more susceptible to all sorts of troubles than women. The older we get, the more expensive insurance is.
Profession also affects the cost of insurance. For those who work in hazardous industries, the insurance company may apply an increasing coefficient. Many insurance companies have premiums for the entire amount of life and health insurance for certain categories of professions.
When insuring a property, the cost of insurance is affected by:
• House or apartment; • Floor/wall material.
The cost of insuring a house will always be higher than an apartment. The cost of insurance depends on the material of the house. If the house is brick, this is one price, if the house is wooden, it is another. The logic is simple, a wooden house burns many times faster, so the cost of insurance is higher. Date of construction of the house. Many insurers do not insure older houses built in the post-war era.
The cost of title insurance depends on the bank and the amount of the mortgage.
In almost all cases, one rule applies: in most cases, in third-party insurance companies, the cost of insurance is 1.5 times lower than in the insurance companies of the bank itself. Sometimes there is a situation when the insurance company refuses for some reason. For example, Ingosstrakh denies insurance to people over 50 years old, and also does not insure houses older than the 90th year of construction. In such cases, you need to contact the insurance companies that will provide insurance.
4. Terms for obtaining insurance.
Registration of insurance consists of several stages:
Collection of documents + registration + bank verification. If all the documents are available, then registration occurs quickly, in one day. Bank verification may take up to 3 days. This means that the estimated minimum period for obtaining insurance is 4 days.
Good luck! Galina Cherkis
Insurance expert Romil Chumakov (St. Petersburg) answers:
Insurance of finishing, engineering systems and equipment, and movable property is not mandatory for mortgage insurance. The amount paid by creditors to the bank is also not insurable. The bank is only interested in the remaining amount of the loan and interest on the construction of the apartment, and this insurance is required, since this part of the apartment is an asset of the bank.
In essence, mortgage insurance protects the apartment from two risks: destruction by explosion and destructive fire, after which the apartment is sealed for ventilation for a period of 10 years. Unless otherwise provided by the insurance contract, then if one of these two risks occurs, the insurance company covers the bank for the unpaid amount of the loan and interest, but does not cover anything for the residents.
In order for residents to insure the paid amount of the apartment’s structure, decoration, engineering systems and movable property, they should additionally voluntarily insure the apartment. In this case, all these elements will be protected not only from fire and destruction, but also from flooding, impact, collision and theft. In the case of the most negative scenario of loss of an apartment for any of the above reasons, under mortgage insurance, the bank will be reimbursed for the loan balance and interest, and the apartment owners will be reimbursed for the cost of finishing, engineering systems, movable property and the amount for the apartment paid to the bank on the date of the insured event.
What is mortgage lending
Once the future borrower has decided on the bank where the mortgage will be issued, it’s time to apply for a loan. Those clients who have a stable income and no debt obligations to other credit institutions are more likely to receive a positive response. The list of documents required to obtain a housing loan is standard:
- Passport, a copy of the work record book certified by the employer, documents on receipt of education, if available, a military ID and a pension certificate;
- Documents confirming the borrower's solvency. These include: a certificate of employment in the standard version of 2-NDFL, if there are additional incomes, they can be reflected in the certificate of income in the bank form; when receiving profit from rented residential space, this can be confirmed by a lease agreement. When making a down payment, you will need a personal account statement containing the required amount;
- Some banks may require a certificate from a drug treatment clinic confirming the absence of registration.
Recently, mortgage brokers have become very popular. They collect the necessary papers for concluding a contract, and also control the process of insuring the selected housing option.
Apartment insurance for mortgage lending is not much different from other types of insurance. First of all, an agreement is drawn up, which reflects all cases in which the loan will be paid by the insurance company, and not by the borrower. When signing a mortgage agreement, one of the mandatory conditions is insurance, failure of which will most likely result in the bank rejecting the loan application. This is understandable - the credit institution is trying in any way to minimize the expected losses. In addition to the insurance offered by the bank, you can additionally arrange an insurance contract yourself with a third-party company. In this case, you can include clauses not provided for in a standard banking agreement.
Additional insurance is taken out in rare cases when there is an urgent need, since the costs of the policy will be significant.
The director of the legal service “Unified Center for Protection” (edin.center) Konstantin Bobrov answers:
Drawing up an insurance contract covering interior decoration, utilities and equipment is not mandatory when entering into a mortgage. This is due to the fact that the above does not apply to the structural elements of a residential premises. The bank has no right to require the borrower to include a provision regarding their insurance in the contract. Moreover, consumer protection legislation prohibits him from doing this. Moreover, if a citizen is completely satisfied with such conditions and wants to protect himself from these risks, he has the right to agree to their inclusion in the contract.
As for the structural elements of the apartment (floor, ceiling, etc.), they must be insured without fail, in accordance with the Federal Law “On Mortgage (Pledge of Real Estate)”.
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