No Doubts with the right Mortgage Process Now

The law on mortgage clearly states that property insurance is mandatory, unless otherwise stipulated in the mortgage agreement. The creditor may, but is not obliged to, offer options with apartment insurance and without it. Certain problems can arise if one or more insurers are imposed with non-market (increased) insurance rates. But this is quite successfully fought by the FAS, which regulates such agreements on cooperation between banks and insurance companies. It is important for the borrower to know that evasion from insurance of the pledged property in case the creditor insists on its binding may lead to the creditor’s demand to repay the funds ahead of schedule: this law was given to him by the same law “On Mortgage”.

The insurance of the construct, according to the mortgage broker GeelongĀ  is mandatory in the bank, and in this situation it is necessary to read the loan agreement. If the phrase “If the insurance is not implemented, then an early return is required”, it will be so. This point is not regulated by law, therefore, only the contractual basis operates.

How to refuse insurance, making out a mortgage?

Responds to the director of the company

According to the legislation of the Russian Federation, property insurance pledged under a mortgage agreement is carried out in accordance with the terms of the contract, while insurance of the construct is not a prerequisite. However, it is important to pay attention to the contract with the bank. If the contract expressly states that in the event of the waiver of additional risks insurance, the interest rate may be increased, this requirement will not conflict with the norms of Russian legislation.

Banking insurance for mortgage lending includes two main points. The first insurance of the real estate object, which is pledged to the creditor. In other words, the bank is insured against unforeseen circumstances: fire, floods and other causes of loss of the facility.

The second item includes life and health insurance of the borrower. So, the borrower cannot abandon the first insurance. According to Article 31 “On Mortgage”, the client is required to insure “the pledged property in full cost and at its own expense from all possible risks”. In other words, you have no right to refuse this insurance.

Insurance: property, liability, mortgage insurance

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But from life and health insurance you can refuse. According to Article 935 of the Civil Code of the Russian Federation, life and health insurance is an exclusively voluntary procedure, the bank can not demand it from you. However, there is one but. In case of your refusal, no one forbids the bank to increase the interest rate. The creditor honestly warns about this in a mortgage agreement. And the growth of interest on the loan can be from 1% to 7-10%, which actually forces the borrower to extend the full insurance. Thus, absolutely legally you cannot insure life and health, but be prepared for the fact that monthly payments will increase. And you cannot challenge this decision of the bank.

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