It is a fact that not many Mexicans know. We refer to having an obligation to obtain insurance when applying for a mortgage loan. So, if you have to request a loan to buy a house, immediately consider that you will have to have extra expenses to meet this requirement. Unfortunately, many are surprised because they find out when their credit has been accepted. And it is for the same reason. We want to prepare you well on the subject and explain how mortgage credit insurance works, do not miss it!
Learning about compulsory insurance
The truth is that at first, the situation may seem quite shocking. You have saved hard to make a dream come true, and when you are accepted, you are informed that you will have to take out insurance separately. But don’t worry, we recommend that you first tell yourself (and at this moment, you are doing it) and then process that the insurance issue is essential.
In general terms, the insurance included during this process benefits you and the financial institution. And you also have to be clear about this from the beginning. But before we see how it works for you, let’s look at how it protects the lender.
Mortgage insurance would protect the bank 100%. This is only if you were to have delays with payments. Only in these cases can the banks make it effective, coming to keep your property.
The truth about how mortgage credit insurance works in Mexico
Understanding how mortgage credit insurance works within our country is quite simple. As we already anticipated, its objective is to be able to assure the lender, which would be the bank, and your house. Let’s take a closer look at how these act:
- This type of insurance is responsible for keeping your home protected, and here comes the first warning.
- Mortgage credit insurance will not always cover you 100%.
- If you did not know, the insurance coverage is reduced as the years go by and you settle the credit. Therefore, your house is less insured in the last years of the payment. A clear example is that if you go in the middle of the years of paying your mortgage, only 50% of the value of your house will begin to be insured.
- This type of insurance policy only insures the home for unpaid balances. In other words, to cover the debt, you owe to the banking institution.
- When you have just paid off your house, and there is no longer any debt with the bank, your property is no longer insured.
- Some banks include insurance, and on other occasions, you are responsible for hiring mortgage credit insurance independently. There is also the possibility that the financial institution comprises said insurance, and you want to hire an additional one.
- Take into account that if you take out direct home insurance, it covers everything inside, including clothing.
As a curious fact, mortgage insurance is much cheaper than car insurance. And people generally prefer to insure their car than their home.
Characteristics of insurance associated with mortgage credit
The following information has been extracted from communications from the Mexican government. Therefore, they will be the most accurate you can find. It is essential that for you to have greater clarity, you ask the bank for the policy or certificate of said insurance, to which you will be able to observe the coverage to which you are entitled.
Let’s start. The policy is one of the main characteristics because it corresponds to the maximum amount the insurer will respond to if your property suffers any damage.
Let’s go back to the sum insured. Based on this, the amount of money to compensate you will be established. Also, within this insurance, there is a factor called coinsurance, which consists in that you as the insured must bear a percentage of all the compensable damage.
Additional toppings are another feature. Here they come to be considered debris removal expenses, for example. Add to this that there is some mortgage credit insurance that covers all the contents of the interior of your house. Whether electronic equipment, home appliances; clothes; you move, etc. For this type of coverage, there is a fixed amount in some institutions. That is why it is essential that before accepting any offer from the banks, you find out well, and if necessary, with a specialist.
Extraordinary expenses are another element that adds to the list of characteristics. These cover some expenses that you might need if the house is not in conditions to be inhabited, such as the payment of rent.
Where to request more information
If you need to consult the information in more detail, you can enter the CONDUSEF page. Here, in addition to analyzing each characteristic, in particular, you will be able to find out about the life and unemployment insurance offered by banks. And that is associated with mortgage credit.
In short, now that you understand how mortgage loan insurance works, you are ready to sign your home loan contract with full knowledge of the situation. We hope we have been able to help you, and if you have any questions, contact Rebajatuscuentas.