The rise in interest rates has made taking out a mortgage loan much more expensive than a year ago, when the Euribor was still negative. In this context, many consumers may opt for taking out insurance with the bank to subsidize the differential of the rate applied to the loan. However, doing so is not always worth it, especially when its cost is included in the mortgage, as is often the case with single premium life insurance.
The Bank of Spain, through the Banking Customer Portal, recommends evaluating the cost of the insurance offered, since it may be higher than the annual amount saved thanks to the discount. The relationship that will be maintained in the future with the bank must also be taken into account.
According to the Association of Financial Users (Asufin), subsidized mortgages tend to be more expensive than conventional ones, "which make it necessary to look for the best prices on the market." The compulsory contracting products to obtain a better interest rate are usually cards and insurance, mainly home and life.
In the case of life insurance, the association warns that almost half -47%- are signed with a single financed premium, and the price of these products is between 60% and 300% more expensive than in the free market. . These types of policies are paid in advance and in one go at the time of contracting the loan. In the event that the consumer does not have the necessary money -the usual amount is about 15,000 euros-, the bank offers the possibility of financing it within the mortgage, charging the corresponding interest.
For example, financing this insurance for 35 years at 1.5% of a loan of 200,000 euros would generate an extra cost in installments of 45.93 euros, which when multiplied by the 420 total installments, adds up to interest of 4,200.60 euros. The premium and interest would add, according to Asufin's calculations, an extra 10% to the initial capital of the mortgage. To this is added, the association highlights, the impossibility for the consumer to cancel the policy once the entire premium has been paid. For all these reasons, there are several rulings favorable to the consumer that consider this method of payment abusive.
The entity may require the contracting of certain insurance to grant the loan, such as a damage policy for the mortgaged property and another that guarantees compliance with the mortgage contract. However, you cannot impose the contracting of insurance with your insurance company, because the client has the right to contract another provider that offers conditions and a level of benefits equivalent to those proposed by the entity. Neither "can worsen the conditions offered for the loan" by accepting an alternative policy, point out from the Bank of Spain.
Another important aspect is that the entity must report the consequences of early cancellation of the insurance and provide information on the insurance necessary for granting the loan. This information must be included in the pre-contractual information sheet (FIPRE), as well as in the European Standardized Information Sheet (FEIN), which is delivered at least ten days before the date of signing the deed.
