MonthApril 2019

Quotity of mortgage insurance

When granting credit, the bank requires borrowers to purchase insurance against death, disability and disability. The share of the home loan insurance contract represents the share of each spouse.

What choice for your contract?

The contract is mandatory and must be at least the amount of capital borrowed. In the case of a single borrower, the question of the share does not arise since the latter will necessarily be insured at 100%.

The insurance portion of a home loan is assessed on the one hand according to the financial and professional situation of each borrower and on the other hand according to the level of protection of the couple in terms of pension. This is the only way to spread the risk equitably between the two borrowers.

If you have not yet established a pension plan, it may be time to take stock with your insurer.

Remember to check with your company if you do not already benefit from collective contracts, which is often the case for executives and most employees of large companies.

Moreover, it is necessary that the insurance portion of each borrower corresponds to the share of each in the overall income of the couple.

Thus, if one of the two co-borrowers contributes up to 80% of household income, its share in the mortgage insurance contract must be the same level.

But to be sure of making the right choice, borrowers can ask themselves the following question: Can I pay the monthly installments of my credit if my spouse dies?

In addition, if you are in the case of a couple without children, think that your family is going to be enlarged.

It is therefore necessary to provide that in the event of the death of one of the two borrowers, the surviving spouse will have to face higher expenses than today.

Finally, be aware that the bank may well require that the quotas respect the level of income of each borrower.

Thus, if your advisor does his job well, he will refuse to let you choose a 50% quota on each head, if one of you wins 80% of the couple’s income.

Some examples of quotations

Elements of the loan

Elements of the loan

Take the example of a couple of borrowers who subscribe a loan of 200,000 euros over 25 years to 4.20% and credit insurance on capital borrowed at a rate of 0.30%. The monthly loan amount excluding insurance will be 1078 € per month.

Situation of borrowers

borrowers

As can be seen, the choice of a 50% share on the head of each insured would have serious consequences in case of death of the gentleman. Madame could not then face the expenses alone and her debt ratio, which would then be more than 51% would put her in a situation of over-indebtedness.

On the other hand, the comfortable salary of Monsieur allows with a proportion of 30% on the head of Madame to face deadlines in case of death of the latter.

In conclusion, the proportion 70/30 corresponds to the strict minimum to respect the rate of legal indebtedness if a disaster occurred. But once paid the monthly loan, Madame would be in great difficulty, his remaining life is only 727 €.

Our advice

In our example, the recommended minimum mortgage insurance ratio is 100% for Mister and 30% for Mister.

The operation of guarantees

Remember that in the event of death or total and irreversible loss of autonomy (third category of social security), the insurer will pay the outstanding capital, while in case of total permanent disability (2nd category of the security social security) or temporary incapacity for work, the latter will pay the monthly installment.

In both cases, the reimbursement will be at the level of the insurance coverage chosen for each insured.

Housing savings plan 2015: rate and state premium

In effect since 1969 and after having long been the preferred placement of the French, the housing savings plan has lost its superb despite a redesign in 2012. With a rate since 1 February 2015 of 2%, the ELP offers a attractive remuneration?

The housing savings plan operates in two phases:

  1. A savings phase first, which can last from 4 years minimum up to 10 years maximum
  2. A loan phase at a preferential rate, the amount of which depends on the interest earned.

At the end of 10 years, the holder no longer has the possibility to make payments.

The maximum duration of the life of the contract can not exceed 15 years maximum.

Object

The reformed ELP focuses on homeownership. Thus, if the old plans made it possible to invest in a rental investment, the loan of the new housing savings plan is exclusively intended for the acquisition of the principal residence.

The main lines of the 2011 reform

housing loans,cah

Since March 1, 2011, the new housing savings plan (PEL) will offer a remuneration that may vary according to the decisions of the Governor of the Bank of France.

For information, Plans opened up to this date retain their characteristics and their own returns.

Rules of operation

Anyone, including minor children, residing in France can purchase an ELP up to one plan per person.

Beginning in the fourth year, the plan holder may extend from year to year up to a maximum of 10 years. Then, he has 5 years to assert his rights to mortgage, which can bring the total duration of the operation to 15 years, it retains all its advantages in terms of rates.

payments

payments and cash

To open a home savings plan, you must pay an initial contribution of € 225 and then make regular savings of a minimum amount of:

  • 45 € per month
  • 135 € per quarter
  • 270 € per semester
  • € 540 per year

Total payments can not exceed € 61,200 per PEL, excluding interest.

State bonus

To benefit from the state bonus, it will now be necessary to apply for and obtain at the end a loan with a minimum amount of € 5,000. In other words, an ELP with a minimum payment of 4 years is no longer of particular interest.

The maximum premium is set at:

  • € 1,525 if the dwelling obtains the BBC (Low Consumption Building) standard
  • € 1,000 in other cases.

Closure of the plan

When the savings plan comes to an end, if the owner has not come forward, the bank closes the plan and automatically transfers the available funds to a CEL. The state premium is then lost.

Taxation 2015

loan tax

The interests of the ELP are exempt from income tax and the flat-rate lump-sum levy but are subject to social security contributions of 15.5%, which will henceforth be deducted from interest every year.

The right to loan

The amount of the right to loan depends directly on the interest earned on the plan and the duration chosen.
The savings plans open since August 1, 2003 allow a loan at a rate excluding loan insurance of 4.20% up to a limit of € 92,000.

If the holder waives his right to a loan, he loses the benefit of the plan (except plans opened before December 12, 2002)

These rights are transferable between family members.

It should be noted that the PEL loan can be cumulated with all the assisted loans such as the PTZ or the ACTION LOGEMENT loan.

 

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