Mortgage, usury, and withdrawal from the insurance policy too high: the customer can find the most convenient offers on the market.
You asked for bank financing. In the face of the mortgage that will be paid to you, the official told you that you will also have to take out insurance for the risk of dismissal and death, which will safeguard the bank if, for one of these events, you will no longer be able to return the loan.
Cost of the policy
Except that, when you do two accounts, you realize that the cost of the policy is extremely high. It almost seems to you that behind it lies the bank’s intent to charge additional charges. So you wonder what to do if mortgage insurance is expensive. In these cases, there are two remedies to be carefully evaluated.
Insurance ends up being a burden on the customer so that, by turning on the main contract, the mortgage one, it can invalidate its validity and even render it null. It is, in fact, a single commercial operation, even if formalized with a different writing and a separate form.
The recent regulations for the protection of borrowers have laid down some guarantees aimed at preventing vexatious conditions from being hidden behind the insurance.
Recently, the Cassation also intervened on this point, which, as we will see in this article, clarified how the cost of the policy can be relevant for the calculation of the usury of the loan. But let’s proceed with order and see what to do if the mortgage insurance is high.
Is mortgage insurance mandatory?
Banks, credit institutions and financial companies often condition the disbursement of the real estate loan to the stipulation of an insurance contract (e.g. building policy, fire, etc. or on the person of the lender for the case of death, serious injury or insolvency, with a constraint in its favor: in this way the bank can pay off the residual amount of the loan by collecting the compensation paid by the insurance company).
The bank may well condition the provision of the mortgage to an insurance policy but cannot oblige the customer to underwrite its own.
In other words, the borrower is free to look for a cheaper policy on the market, always on equal terms. In this case, the bank must accept, without changing the conditions offered for the disbursement of the mortgage, the policy that the customer finds on the market. This policy must have minimum contents corresponding to those required by the credit institution and the financial intermediary.
Right to withdraw from expensive insurance
If, on the other hand, the customer signs a policy proposed by the bank, by the credit institution, by financial intermediaries or by their agents, the customer has the right to withdraw from the same within sixty days. In the event of withdrawal from the policy, the loan agreement remains valid and effective. If the policy is necessary, the customer can replace another policy found on the market with the minimum required contents.
The bank must inform the customer of the commission received and the amount of the commission paid by the insurance company to the intermediary, in both absolute and percentage terms on the total amount.
To hedge interest rate fluctuations, mortgage transactions can also be linked to the subscription of other financial products, such as, for example, swap derivative contracts or investment funds which are pledged to guarantee the fulfillment of mortgage obligations. ; also, in this case, the subscription is optional.
Expensive insurance: the mortgage is usurious
To calculate whether or not the bank loan exceeds the usury thresholds, it is not only necessary to consider the interest rates but also the cost of all ancillary charges such as the preliminary costs and the insurance policy. ABF himself, the Banking and Financial Arbitrator, pointed out more  that the usury of the loan contract must be assessed by also counting the insurance costs incurred by the debtor to obtain the credit.
Cost of insurance
The cost of insurance is indicated in the Tang (annual percentage rate of charge); it is in fact from this that we can get a precise idea of the charges that are incurred with financing and whether this is convenient or not.
Therefore, the failure to explicitly include in the costs relating to the insurance premium violates the obligations on the information in favor of the consumer, even if it is a cost imposed by the law and obtainable from other documentation.
This violation determines the nullity of the clause relating to the Taeg and consequently the application of only the substitute legal rate.
What are the consequences of a usurious mortgage?
In this case, the customer no longer has to return the interest or the insurance costs and premiums to the bank, which will be returned to him as soon as possible.