Historic change to mortgage insurance in France starts today

The rules on changing contracts - and medical declarations - are evolving in a bid to make policies simpler and encourage competition

Although it is not compulsory in theory, in practice mortgage insurance is often essential in France for obtaining a property loan.
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Mortgage insurance contracts in France are changing today (June 1) as a law adopted last February comes into force, with measures designed to simplify the process for the public.

1. Contract can be ended at any time

Borrowers can now change their mortgage insurance at any time, without fees. This applies to new contracts signed on or after June 1, and will come into force for existing contracts on September 1.

Insured parties can request the change via a cancellation letter sent by registered mail.

Previously, it could only be changed once a year, on the anniversary of the contract signing. The new rule is designed to simplify the process for borrowers and introduce more competition in a bank-dominated market.

2. No more medical questionnaire

The majority of borrowers will no longer need to fill in a medical questionnaire to determine their level of health before receiving a quote for mortgage insurance.

From today, this applies to anyone aged under 60 and borrowing and insuring €200,000 or less. A couple where both people are aged under 60 will therefore be able to borrow €400,000 without filling in a medical form.

Some banks had already taken this step; Crédit Mutuel removed the need for a medical questionnaire for its ‘loyal’ clients in 2021.

Read more: Two French banks stop asking health questions on mortgage applications

3. Medical declaration obligation halved

People who have previously had cancer or hepatitis C will no longer need to declare their previous illness if they have been in remission for five years at the time of signing the contract.

Previously, they had to declare it for 10 years, making it more complicated and expensive to obtain insurance. A previous reform had already halved the time from 20 years.

Health associations had been calling for this reform for a while, having said that many people who had previously been ill often found it difficult to secure finance for buying homes.

Mortgage insurance is an insurance policy that covers the repayment of instalments or capital due on a remaining loan in the event of a major event (death, total loss of autonomy, permanent disability, loss of employment, etc.).

Lenders request it in order for people to obtain a property loan.

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