Borrower Insurance: The Hidden Gold Mine of Your Loan

In France, when we talk about real estate credit, we focus on the interest rate. We fight to get 3.5% instead of 3.7%. However, the real hidden cost is often Borrower Insurance. It can represent up to 30% of the total cost of your loan.

The Problem: Paying for a Disappeared Risk

Insurance is calculated to cover the capital you owe the bank. However, in standard bank contracts ("group"), the premium is often fixed or calculated on the initial capital. This means that even after 15 years, when you have repaid half of your debt, you are still paying full price. You are insuring €200,000 when you only owe €100,000.

The Agitation: The Lemoine Law Changes Everything

Since 2022, the Lemoine Law allows you to change borrower insurance at any time, without fees, and without waiting for the anniversary date. This is where the strategy becomes interesting. If you make a partial early repayment (amortization), you reduce the Remaining Capital Due. Less capital due = Less risk for the insurer = Cheaper insurance premium.

The Solution: The Double Savings

The winning strategy consists of combining two actions:

Make an early repayment (via AmortiApp) to reduce the capital.

Immediately change insurance by presenting this new reduced capital.

You win on both fronts: you pay less bank interest AND your insurance premium collapses.

The Simulation on Amorti

Visualize the impact on capital.

Enter your credit into AmortiApp.

Simulate an exceptional repayment of €10,000.

Look at the new Remaining Balance.

Use this new balance to request external insurance quotes (delegation).

Often, the savings on insurance alone "repay" part of your investment. It is a financial lever that few French people use.

How to Calculate Your Savings

To calculate your potential savings, follow these steps:

Determine your current loan balance and insurance premium.

Use AmortiApp to simulate an early repayment and calculate the new loan balance.

Request insurance quotes from external providers using the new loan balance.

Compare the new insurance premium to your current premium and calculate the savings.

Key Takeaways

Borrower insurance can represent up to 30% of the total cost of your loan.

The Lemoine Law allows you to change borrower insurance at any time without fees.

Making an early repayment and changing insurance can result in double savings.

Use AmortiApp to simulate the impact of an early repayment on your loan balance and insurance premium.

Calculate your potential savings by comparing your current insurance premium to the new premium after changing insurance.

Real-Life Example

Let's consider an example:

Current loan balance: €200,000

Current insurance premium: €1,500 per year

Early repayment: €20,000

New loan balance: €180,000

New insurance premium: €1,200 per year

In this example, the borrower saves €300 per year on insurance premiums, which can add up to €6,000 over 20 years.

Frequently Asked Questions

What is the Lemoine Law and how does it affect borrower insurance?

The Lemoine Law allows borrowers to change their insurance at any time without fees, giving them more flexibility and potential savings.

How can I calculate my potential savings from changing insurance?

Use AmortiApp to simulate an early repayment and calculate the new loan balance, then request insurance quotes from external providers and compare the new premium to your current premium.

Can I change my insurance provider at any time?

Yes, thanks to the Lemoine Law, you can change your insurance provider at any time without fees or waiting for the anniversary date.

Conclusion

Borrower insurance is a significant cost component of your loan, but it can also be a hidden gold mine. By making an early repayment and changing insurance, you can save thousands of euros. Use AmortiApp to simulate the impact of an early repayment on your loan balance and insurance premium, and calculate your potential savings. Don't let the bank win on all fronts – recalculate everything and take advantage of the Lemoine Law to save money on your loan. Don't wait – simulate your new capital today and start saving!