In Mexico we are lucky to be able to choose who to buy the lien release policies and against all risks when we ask for a loan or a mortgage transfer. We have the option of taking either the bank offers or our co n bond insurer.
Recently, a client chose to buy the policies from his insurance broker. They were a little cheaper than the bank. What was not expected is that the financial institution will charge you for the study and endorsement of mortgage credit insurance.
– Does it make sense? -I wonder.
Yes, I think he does. Let’s get to the root of the matter.
What are the policies requested by the bank when granting a mortgage loan?
Financial institutions always ask you for two policies:
1. Lien freedom insurance
There are several modalities of this policy, but the important thing is to understand why the bank asks for it.
Suppose you lend money to a couple well known to your family to buy a nice house. Each month, without fail, they pay the fee. One day, they let you know that the couple has had a serious accident. Apparently, they will not be able to return to work. The e gras because you are alive and then ask yourself, how you get your money back. True?
The lien release insurance does exactly that: it guarantees the bank that in case of partial or permanent disability or death, the outstanding debt will be canceled, that is, the business will have the expected closing. If something serious and unexpected happens to one or to all those who acquired credit, the family will not vouch for the pré s chaff.
It is of substantial importance, don’t you think?
2. Insurance against all risks
When taking the credit, the financial institution will ask you for an all risk policy, insurance that covers real estate. You would also do the same if it were the case. I explain.
When granting the credit, the bank delivers the money and as a guarantee that you will pay the debt, mortgage the property. Of course, the bank needs your property to be in good condition to serve as collateral. If, for example, a fire occurs, it could lose value. That is why it has the obligation to reduce the risk. The shape? Safe to assume the cost of recovering the property, if affected, or pay your value if the loss is total.