With the increase in average life expectancy, the category of seniors wants to be more and more inclined to concretize a real estate project by taking out a mortgage. However, the limit of credit duration as well as the cost of insurance worries banking institutions: are seniors able to repay their loan?
Banks are hesitant to lend to seniors
There are many causes nowadays for seniors to apply for a mortgage: the wish to become the owner of a second home in the sun, buy a home for their children or grandchildren, build real estate in order to bequeath it later.
For bankers, this clientele presents a high risk. This requires them to properly study each applicant profile: age, state of health, smoker or not. Obviously, to grant a mortgage, banks require that a senior loan insurance is taken out. And be aware that this insurance has a cost of up to 30% of the total cost of your financing.
Why request insurance delegation?
Banks tend to impose their own borrower insurance contracts on their customers. And senior loan insurance like this can be priced higher than the average. You should therefore pay attention to this point and find out about the offers on the senior market. With insurance delegation (purchase of insurance external to the bank), you can access better rates and thus reduce the cost of your credit.
Take the time to carefully compare the offers to find a contract that meets the conditions of equivalence of guarantees required by the bank. I recommend that you use the services of a broker specializing in senior loan insurance.
Once your borrower insurance is purchased, know that you have the right to replace it with another contract of your choice, during the first 12 months (Hamon law). So, if you feel the cost is still too high or you are not well covered, you have time to make a new comparison and change insurance.
Finally, regarding the subscription of your mortgage, do not forget to play the competition between your bank and others. You will have more leverage to properly negotiate your real estate project.