Rental investment: how to choose loan insurance?
For a rental real estate investment, whose main asset is security, you have to take the time to choose your borrower insurance. Objectives: to secure his approach and to reduce the cost as much as possible. To know: The insurance of the loan is essential, but the banks do not require the same guarantees as for a residential real estate investment.
Rent, a sufficient guarantee?
In a rental loan, the rent received by the investor represents for the bank a form of guarantee of future repayment. This can therefore only require the subscription of mandatory guarantees, Death and Total and irreversible loss of autonomy. If the bank does not require the loss of employment, temporary incapacity for work and permanent total or partial disability guarantees, each will decide according to their own situation (income, age, constitution of the family, etc.) to subscribe to it. or not. In case of paid unemployment, the loss of partial income can be offset by the assumption of monthly payments by the insurance. At least 24 to 36 months.
Delegation of insurance: often the right financial choice
The credit institution systematically offers its client to subscribe to its borrower insurance with him, as part of a group contract. Calculated according to the average risk level of all the insureds, this contract does not take into account the individual situation of the customer: age, occupation, health, etc. It is therefore often more advantageous to take out insurance through an individual contract. The broker will analyze the particular situation of the borrower and offer guarantees tailored to his profile… and often cheaper. It will then be necessary to carry out a loan insurance delegation.
SCI, SCPI, guarantees and delegation of insurance
In the case of a rental investment via an SCI or a SCPI, each partner may choose his credit institution. For the insurance of the loan, here too a lot of flexibility to distribute the quotas and to adapt the guarantees to the situation of each one. The insurance delegation can be put in place, but it is more advantageous for the partners to choose a single insurer.