Some of them are obligatory and appear in every bank, but some are optional – using them is not always necessary and profitable.
The insurance will appear when the customer’s own contribution to the transaction is less than 20%. The insurance covers the amount that is the difference between the own contribution (currently at least 10%) and the required target contribution. The insurance lasts until we repay the insured amount.
The cost is usually included in the loan installment (it takes the form of a raised interest rate), sometimes it is a one-time fee, and it happens that it is a cost that is covered by the bank.
This is temporary collateral for the loan, which lasts from the day the loan is paid out until the mortgage is entered in the land and mortgage register.
This insurance has the form of an increased interest rate, which decreases when the mortgage is entered by the court. It occurs in every bank and has a similar amount. The largest impact on the loan price is when we buy real estate on the primary market, the price of which we pay in tranches. The longer the payment time, the higher the insurance cost.
Real estate insurance
When buying a property on credit, we must ensure it against fire or other random events. Most often, the customer has the option of using such a policy at the bank or at an insurance company. Sometimes buying insurance in a bank affects the cheaper price offer. Real estate insurance must last for the entire loan period.
Life insurance, against the risk of losing a job, accident insurance
The insurance mentioned above is usually optional and in this respect, banks have full freedom in shaping the insurance terms. When choosing a loan, we can decide whether we are looking for a bank where these insurances are not mandatory. Sometimes a loan offer with insurance can be cheaper than a loan without this element.
Banks promote the use of insurance, compensating their price with a lower interest rate or no commission for granting a loan. It is worth emphasizing that buying out insurance, especially life insurance, does not necessarily directly improve the transaction security for the client himself, who thereby gains additional credit collateral for himself, his family and his household.
The amount of insurance in banks is really large. When comparing mortgage loans, it is worth focusing your attention on this aspect of the banking offer. It often has a decisive impact on the total cost of credit.