The Hamon law, 2014 consumer law, has brought real improvements to mortgage loan insurance. Find out what the changes are and what the consequences are for borrowers taking out a home loan offer.
The impact of the Hamon law on credit offers
Since July 26, the date of application of the Hamon law, real estate borrowers can, during the 12 months following obtaining their credit, make a change to their loan insurance contract. They thus have the possibility of competing with insurers for their credit insurance and replacing the bank’s credit insurance contract with a competing offer, when they wish and without any cost.
Until then, the consumer had only been able to opt for another insurer at the time of the anniversary date of signing his contract and fees could be applied to him. The Hamon law thus facilitates competition between insurers and then favors the borrower. The lending bank has the obligation to accept an insurance delegation contract as soon as it includes the same level of guarantee as that of the current contract.
Other changes made by borrower insurance
No rate increase possible
Throughout the duration of a mortgage, the insurance organization cannot terminate a customer’s insurance contract due to an aggravation of the risk for the insured, except if the insured is responsible for this aggravation. The insurer is also not entitled to make a modification to its loan insurance rates without obtaining the agreement of the borrower.
Change banks more easily
When a borrower wishes to change bank establishment, for example to carry out a repurchase of mortgage, the current bank is obliged to deliver to the new establishment a detailed list of direct debits and transfers carried out on the customer’s account. This measure aims to simplify the change of banking establishment.
A withdrawal period of 14 days
Another measure of the Hamon law: the establishment of a withdrawal period of 14 days for the insured following the subscription of a new contract, in order to prevent any duplicate loan insurance.
End of the rechargeable mortgage
The Hamon law also prohibits the rechargeable mortgage, which previously allowed the borrower to mortgage his residence to guarantee consumer credit.
Real estate credit: the impact of the Hamon law