Conventional Mortgage InsuranceTraditional mortgage insurance
Mortgages guaranteed in France
Claiming an insurance bond for a conventional fee on a real estate becomes the standard for mortgage creditors in France. Although overseas purchasers are only used to traditional credit bonds, in France most mortgage loans are now guaranteed by an underwriter.
This guarantee is known as the security deposit banker d'un credit real estateer and is provided by specialised reciprocal insurance companies, commonly known as social security deposit banks. A lot of creditors are hesitant to exercise prudence if you are not domiciled in France, but it depends on the type and type of your claim. Current expats looking for money for do-it-yourself or to invest in rented accommodation would become entitled to it.
In the case of collateralised loans, the insurance company serves as a surety for the mortgage provider if the debtor defaults on his credit. On the other hand, the debtor in turn makes a payment to the insurance company which is proportionate to the amount of the credit. Thus, there is no royalty set on the ownership by the mortgage bank, and no legitimate mortgage enrollment fees to be paid.
Warranties are based on the reciprocity of credit exposure between creditors paying into a single credit protection reserve. They have merged to form their own reciprocal insurance company, the largest of which is Le Crédit Logement, which controls around half of the total insurance markets.
Use of this kind of collateral has increased sharply over the last ten years, from around one third of all mortgage bonds in 2000 to more than half of all mortgage bonds today. A key reason for this increase is that transaction costs are lower than for a traditional mortgage.
Though the fee for a conventional mortgage may vary depending on the borrower and mortgage type, they still account on averaging about 2% of the total amount of the mortgage in terms of charges and tax. Over and above these acquisition costs, a fee of around 1% is charged for the repayment of the mortgage in the case of a real estate transaction, a procedure known as the main leven.
An insurance policy does not require such a take-back procedure or charge and the formation costs are lower. Even though the charging structures between the creditors are different, it is not common for them to consist of two parts: An indemnity charge, 75% of which is refunded when the credit is paid back; a handling charge withheld by the indemnity.
There is a charge for the warranty of approximately 1.5% of the amount of the credit and the handling charge will vary by approximately 0.5% of the amount of the credit, although the charges are sometimes negotiated. For example, the ?150,000 start-up charge for a credit could be in the order of 1,700, consisting of a 300 handling charge and a 1,400 charge for the warranty.
It will be withheld by the creditor and 75% of the latter will be repayable at the end of the mortgage. Seven percent of the credit. Sometimes the charge is not refundable, but in these cases the starting charge will be lower, e.g. 1%. Drawing on institutionally backed securities is usually a faster way of doing both a buying and a selling operation than a mortgage, as there is no need to go through the mortgage entry mechanism.
They are also particularly useful for mortgages with a shorter term, as there is no cost to repay a mortgage. Using insurance warranties does not mean that your home is not at stake if you do not make the payment, because the insurance company can eventually collect money in court and get your real estate sold if you do not do so.
Insurers provide the guaranty to the banks and not to the lenders.