The Impact of the Lemoine Law on Borrower Insurance and Mortgage Credit

1.Who is affected by the Lemoine law?

The Lemoine law has significantly advanced the rights of borrowers in terms of insurance. Thanks to this law, individuals who have taken out a mortgage for residential or mixed use (residential and professional) can freely put different insurance contracts in competition with each other, terminate their current contract free of charge or penalty, and without having to wait the expiry date of their contract. At the end of the day, it is therefore several thousand euros in savings that await borrowers, and a market that is more open to competition, and therefore more competitive.

2. What are the benefits of having competition?

When taking out a loan to finance a real estate purchase, the bank obliges the borrower to take out loan insurance in return for the loan. Mortgage loan insurance is a security for the bank: in the event of incapacity for work, disability, or death of the borrower, the latter could no longer repay his loan. On average, more than 80% of loan insurance contracts are insurance offered by banking establishments. However, policyholders are still poorly informed or prefer the easy way out by subscribing to the insurance offered by their bank. Freely choosing the institution that will insure your loan is one of the freedoms offered by the Lemoine law.

3. What is the impact of the Lemoine law on the price of mortgage credit insurance?

Policyholders can make significant savings with borrower insurance taken out with a company outside their bank. The latter can achieve between 25 euros and 50 euros in savings per month, or 7,500 euros to 15,000 euros on the total cost of a 25-year mortgage. This option allows you to choose insurance adapted to your situation and individual characteristics.

4.Are the health questionnaire and medical formalities removed?

Yes, but under certain conditions. The Lemoine law also ratified the abolition of the health questionnaire which allowed banks and insurers to estimate the risks represented by the state of health of borrowers. The previous law permitted the application of additional premiums. Patients and former patients were heavily penalized, and saw themselves applying significant surcharges because of their state of health.

The Lemoine law now establishes the abolition of any medical formality for mortgage loan insurance if it meets 3 cumulative conditions. The insurance must relate to a home loan granted to a consumer for the financing of a property for residential use or mixed use, the insured part of the accumulated outstanding loans must not exceed 200,000 euros per insured and the the loan repayment deadline must occur before the insured’s 60th birthday.

5.What does the right to be forgotten change with the Lemoine law?

Before 2022, former patients benefited from the right to be forgotten 10 years after their cure (with the exception of cancers discovered before the age of 21, for which the period is 5 years). With the new provisions of the Lemoine law, people formerly suffering from cancer or hepatitis C now benefit from the right to be forgotten 5 years after their cure (end of treatment and absence of relapse). They will be able to obtain a mortgage under the same conditions as all other borrowers. Eventually, it is expected that this provision will be extended to other chronic diseases such as diabetes.