Group or delegation contract?
The calculation of the mortgage loan insurance rate depends mainly on the nature of the contract. To put it simply, there are on the one hand the “group” contracts offered by the banks or their subsidiaries and on the other hand, the contracts offered in external delegation.
The former calculate the premium on the capital borrowed, the latter on the capital remaining due.
Mutualization of the banking contract
If you opt for the group contract of your bank, the calculation will be relatively simple since it involves applying the following formula:
Loan Insurance Calculation Formula
Take the example of a couple who borrows 150,000 euros with an insurance rate of 0.30% by choosing the following percentage: 100% for Monsieur and 50% for Madame. The monthly payment will be calculated as follows:
Which gives as result: 56,25 € .
Note that the duration and the credit rate do not affect the calculation.
Individual pricing with an external delegation
With regard to external delegation, it is not possible to calculate the premium or the rate accurately without having a pricing software. In addition, these results depend on the companies and vary from one contract to another. They are also based on an analysis of the situation of each borrower that combines two variables:
- The age
- The capital remaining due at the end of the period following the amortization schedule
In addition, there are many situations that can increase the premium, such as smoking, aggravated health risk or dangerous work.
In addition, keep in mind that rates may vary from one company to another. It is therefore advisable to go around the competition before choosing.
Choice of the quota
When you buy a loan, the bank requires that you be insured for 100% of the capital.
For this, a couple of borrowers can choose freely to distribute the load on each of them by combining for example the following quotations:
- Half on each head
- 70% for Monsieur and 30% for Madame etc.
The insurance portion therefore represents the percentage share of each borrower.
By choosing a percentage of 100% on each head, it is thus possible to ensure up to 200% of the loan amount. This choice will obviously influence the calculation of the final cost.
No need to talk about rates or premium without addressing the chapter of the insurance contract guarantees. In fact, any tariff comparison must be based on equal guarantees.
Most contracts include death and disability guarantees and incapacity for work (after a 90-day deductible). But looking at it more closely, you will notice that there are some noticeable differences, particularly with respect to disability. We also advise you to read the chapter on exclusions carefully.
Lastly, other factors coming into the mortgage insurance calculation, the options may weigh down the rating as the unemployment insurance.