Where non-residents are considering acquiring a property in France using a non-resident mortgage, one of the key issues they face is obtaining mortgage protection insurance.
This insurance is often required by lenders (although it is not legally mandatory), as a precondition for granting a loan. However, for non-residents, obtaining mortgage protection insurance for a mortgage taken out in France can prove to be difficult,
although not impossible, and will involve a number of challenges.
Finding a mortgage protection insurance policy that covers the country in which you are resident
There are insurance companies in France that impose geographical restrictions on non-resident borrowers, thereby limiting their access to certain insurance products.
Some insurers limit their products to European Union member countries. Others may have a wider scope.
The eligibility criteria for countries covered by mortgage protection insurance may vary between insurers, and will depend on certain factors:
- Political and economic risks: Insurers assess the political and economic risks associated with each country. Politically or economically unstable countries may be excluded from the cover due to the increased risk of payment default by borrowers.
- Regulatory and legislative framework: Insurers review the laws and regulations in each country to ensure they can operate legally and effectively. Some countries may have strict regulatory requirements or laws that make it difficult for insurers to provide insurance cover.
- Risk analysis: Insurers carry out in-depth risk analysis to assess the probability of default of borrowers in each country. Factors such as economic stability, the unemployment rate, household debt levels and other economic indicators are factored into this assessment.
- Claims history: Insurers also review the claims history in each country in order to assess the potential risks. A high claims history may point to there being an increased risk for the insurer and may lead to that country being excluded from the cover.
Obtaining mortgage protection insurance policies in your language
The French language and French culture can constitute an obstacle for non-residents in understanding the terms and conditions of mortgage protection insurance and communicating with insurance companies.
It is important for borrowers to obtain documents in a language that they know well, so that they can understand their full contents.
However, very few French insurers issue more than French and English versions, meaning that documents completed in another language will need to be translated.
Undergoing medical examinations in your country of residence
French insurance companies offer approved medical centres throughout France that carry out the examinations needed for an application to be considered.
These centres offer a number of advantages:
- the speed of arranging appointments
- combining of the various examinations
- the results are sent directly to the insurer by the centre
- the medical expenses are paid by the insurer
Where a future policyholder is resident outside France, the procedures may be complicated.
Indeed, insurers do not always have access to approved medical centres in the country in question, and the insured must therefore arrange the various examinations themselves, such as a blood test in a laboratory combined with an electrocardiogram by a specialist.
The tests necessarily take longer and the costs need to be advanced by the insured.
Some of the costs may be reimbursed once the mortgage protection insurance application has been approved, subject to maximum repayments established by each insurance company.
Fees may vary considerably between countries. In France, a blood test costs €20 on average, compared with €220 in the United Arab Emirates and €100 in England.
The insured may therefore be required to make a top-up payment, which may be relatively large.
Full coverage
Due to the additional risks associated with the insured not being resident in France, insurance companies may limit their cover or increase premiums for non-residents.
