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Taking out a life assurance policy in connection with a French mortgage offer is not always compulsory

Thursday, 30 May, 2019

The requirement to take out a life assurance policy when taking up a French mortgage offer is not always compulsory  Some French banks have modified their lending criteria, whereas ,it used to be  a compulsory requirement, (especially for the higher loan to value mortgage amounts), this is no longer the case.  The effect  is a reduction in the overall cost of the French mortgage, due to the fact that life assurance premiums will not be taken into account when calculating the estimated cost of the French mortgage over the mortgage term , ie the APRC, (the Annual Percentage Rate of Charge), which is applied to all credit agreements, as a regulatory requirement .    Those banks who no longer make it a requirement , leave the decision up to the borrower as to whether this is a personal  requirement, based on their individual financial circumstances.  
Please note however that the bank’s decision to waive the life assurance requirement, this does not constitute a recommendation on our part to ignore the life assurance question. Rather it simply enables you to proceed with the mortgage option more quickly
The borrower must bear in mind that by taking up this option, in the event of either death the mortgage capital will not be repaid from a life assurance policy arranged to cover this mortgage.
Our suggestion , prior to making the decision , would be to  review your situation to assess whether the mortgage payments would be affordable for beneficiaries should one of the co-borrowers die during the mortgage term. This would include asking to what extent the existing income stream is dependent on that borrower's continuing good health. During the course of French mortgage application , as Independent Financial Advisers we can a provide a whole of market Uk life assurance comparison to compare terms and costs of life assurance policies available in the UK to enable you to make an informed decision.
If the answer is that the payments would not be affordable or the continuation of the mortgage would be an inconvenient encumbrance( in the event of that person's death or severe ill health) resulting in the property having to be put on the market for sale , in such circumstnaces it could be in the borrower's  interests to take on some life assurance to ease the burden.