Probably there is no such person who would not want to have his own comfortable housing. But, unfortunately, not everyone has the opportunity to purchase it. Therefore, in our country, many young couples are considering the option of purchasing housing on credit. When registering an apartment for a mortgage, many banks force their customers to insure their living space against loss or damage. At the same time, not only real estate is insured, but also the health and life of the owner of the apartment. It is often almost impossible to refuse this, because otherwise the bank will simply refuse to provide a loan.
Here, the majority of people have a question: "Is insurance of a mortgage apartment mandatory or not?" The answer is clear: required. The thing is that, according to Russian law, any property that is purchased in a mortgage must be insured. Therefore, every citizen who wants to register a home on a mortgage must have a detailed understanding of real estate insurance. Let's try to understand this issue in more detail.
Can I refuse insurance services when applying for a mortgage?
Before you take out insurance, you need to understand what insurance mortgage apartment gives in general. According to the current legislation, only mortgaged property, i.e. a house or apartment, can be insured when registering a mortgage. But many banks, in order to reduce their own risks, force their customers to purchase additional insurance services, among which the most common are life and health insurance of the borrower, as well as legal transparency of the purchase / sale transaction. In case of refusal to purchase additional insurance services, financial institutions, in most cases, increase the interest
rate on the mortgage. Thus, it is impossible to refuse insurance services.
What cases are covered by insurance?
Mortgage insurance protects the borrower from the following risks:
- from fire, explosion, flood and other emergency situations, as a result of which the living area was damaged and it cannot be restored;
- damage caused to the apartment by third parties;
- financial institution has launched a new mortgage program with more favorable conditions.
If insurance was also issued upon the purchase of real estate in a mortgage, then upon the occurrence of any of the above cases, the balance of the loan debt is paid by the insurance company. If the borrower refused to take out insurance, then he will be obliged to fulfill all the obligations stipulated by the loan agreement.
Mortgage Insurance Terms
As the current law states, mortgage insurance must be arranged before concluding a loan agreement. This should be done by the borrower independently. He must determine the insurance company, the services of which he will use, and also conclude an insurance contract. Moreover, its validity must coincide with the loan term.
Apartment insurance, the cost of which depends on several factors, can be paid once a year or quarterly.
The size of insurance premiums is affected by:
- the period for which the insurance contract is concluded;
- state of living space;
- the number of purchase / sale transactions completed prior to this with real estate.
The insurance period can vary from 30 to 50 years, but it must coincide with the period of use of borrowed funds.
Requirements for living space when applying for insurance
Mortgage apartment insurance is permissible only if the living space meets the following requirements:
- physical deterioration of the building in which the apartment is located does not exceed 60 percent;
- the borrower has a conclusion on the technical condition of the housing and an act on its assessment, drawn up by a professional independent expert;
- legal purity of all transactions that were previously made with the property;
- availability of all necessary documentation for the apartment.
If any of the above items is not met, then the insurance company will refuse to provide its services, and, therefore, it will be impossible to get a mortgage.
What documents are needed for home insurance?
Every person who plans to acquire their own housing is interested in the question of what documents are needed for insuring a mortgage apartment. You will need to prepare the following package of documents:
- documents for the living space to be insured;
- passport of a citizen of the Russian Federation;
- the act of technical inspection of the apartment, indicating its current value;
- extract from the Unified State Register;
- copy of the technical plan of housing;
- the original and a copy of the extract from the house book.
For title insurance, in addition to the above documents, you will need to prepare:
- a document certifying the borrower's right to own living space on previous transactions;
- a document confirming the fact of a purchase / sale transaction;
- certificate of state registration of the apartment;
- a document confirming that the spouse does not object to the sale of housing;
- utility bills.
If, in addition to real estate, the borrower insures his life and health, then a certificate of his health will be needed.
What documents will be required from the seller of the apartment?
Mortgage insurance assumes that the seller will also be required to provide a specific set of documents.
He will need the following:
- notarized copies of all pages of the passport;
- the consent of absolutely all family members to sell housing that have the right to own an apartment;
- if the current owner of the apartment is a pensioner, then copies of the IPA and ND certificates will be required;
- if people under the age of majority are registered in the apartment, a copy of the permission to sell from the custody party will be required.
It is worth noting that each insurer puts forward its requirements for the procedure for obtaining insurance, so the list of necessary documents may differ from the above.
Cost of insurance services
It is impossible to say unequivocally how much the apartment insurance will cost. The cost depends on the insurance program, as well as the technical condition of the living space.
For example, with property insurance, the cost of insurance can range from 0.3 to 1% of the value of real estate. This also takes into account the condition of the apartment, the age of the house, as well as the presence of security systems.
The cost of title insurance can range from 0.1 to 0.6 percent of the value of real estate. If everything is in order with the legal purity of housing, then you can count on the lowest percentage.
If, in addition to the living space, the borrower also wants to insure himself, then the services of the insurer will cost from 0.7 to 1.5%. At the same time, the state of health of the insured and the type of his activity affect the size of insurance premiums.
The most economical option is a comprehensive policy that includes all the services discussed earlier. Its value can vary from 1 to 1.5 percent of the value of the apartment.
Today, the opportunity is available to know exactly how much mortgage insurance will cost. The calculator implemented on the sites of most insurance companies will help you with this. With it, you can determine the exact amount of insurance premiums.
Mortgage Insurance Process
So, how to insure an apartment? This question is asked by many people who plan to get a mortgage.
The procedure for issuing an insurance policy occurs in the following sequence:
- Find an IC offering the most favorable conditions.
- Carefully study the insurance contract. This will help to avoid various pitfalls and the presence of hidden services that are illegal by the insurance company.
- Familiarize yourself with the insured events covered by the policy, as well as the amount of cash compensation and the timing of their payments.
- Submit a standard application to the insurance company.
- Make an insurance premium of a specified amount and within the time period specified by the contract.
The insurance contract is drawn up in triplicate: the first remains with the insurer, the second you take, and the third you give to the bank.
Where to insure property when applying for a mortgage?
Nowadays, mortgage apartment insurance is one of the most common areas that a large number of insurance companies deal with, therefore, there will not be any special problems with finding an insurance company offering optimal conditions. But here it is important to understand that not all insurers work honestly, therefore, in order not to fall into the hands of fraudsters, it is recommended to use the services of only reliable and trusted companies. Next will be considered the largest companies involved in mortgage insurance.
Sberbank: conditions of mortgage insurance
Sberbank is the largest financial institution in Russia with state support, therefore this company not only offers optimal insurance conditions, but is also one of the most reliable.
Apartment insurance for a mortgage in Sberbank is issued on the following conditions:
- insurance period - up to 30 years;
- amount of insurance premiums - from 0.3 to 0.8%;
- insurance amount - not less than the remaining debt and not more than the cost of living space;
- insurance programs - housing and comprehensive.
Apartment insurance with a mortgage in Sberbank is issued no more than five days, so you do not have to spend a lot of time and you can quickly buy an apartment on credit.
Real estate insurance in VTB
The second bank in Russia in terms of mortgage lending is VTB.
Mortgage apartment insurance in this financial institution is subject to the following conditions:
- insurance period - up to 30 years;
- amount of insurance premiums - from 0.5 to 1%;
- insurance amount - not more than the market value of the living space;
- insurance programs - comprehensive.
The procedure for issuing an insurance policy at VTB takes no more than one week.
Registration of insurance policy in Rosgosstrakh
Another indisputable market leader in the field of mortgage insurance is Rosgosstrakh. She offers her clients the following conditions:
- insurance period - up to 50 years;
- amount of insurance premiums - from 0.12 to 0.65%;
- insurance amount - not more than the market value of the living space;
- insurance programs - housing and comprehensive.
Insurance services from Rosgosstrakh are much cheaper, since when calculating the cost of the policy much more factors are taken into account, including the location of the apartment or house.
What to do in case of an insured event?
We talked about all the nuances associated with mortgage insurance. Now it remains only to consider the procedure for the occurrence of an insured event. To receive cash compensation you must:
- In the event of any force majeure, it is first necessary to report the incident to the competent authorities.
- Notify the insurance company about the incident and report the cause of the accident.
- Prepare a package of documents for the affected apartment.
If everything is done in accordance with the law and in a timely manner, then the obligation to repay the debt falls on the insurance company, and the borrower receives monetary compensation. It is worth noting that the debt must be repaid by the insurer before the expiration of the loan agreement. Therefore, so that there are no problems, always read the terms of the agreement.