When carrying out a real estate project, using a real estate loan is often one of the most popular financing solutions. Indeed, many owners and future buyers opt for real estate credit for various reasons. First of all, this type of financing is more or less easy to obtain. Then, it provides the borrower with the amount he needs to carry out his project. The latter will repay the loan according to its means, but also according to the terms of the contract signed with the creditor (bank, credit company). When granting a real estate loan, the borrower is often asked to take out borrower insurance. What exactly is it? What are the challenges in particular?
What is borrower insurance?
You will find on many sites the information you need to find a real estate loan suited to your project and avoid any loan refusal, as well as your financial possibilities. Regarding borrower insurance, as its name suggests, its function is to insure the borrower. In other words, the loan allocated to the project leader is covered from certain risks which may arise during the repayment period of said credit. The creditor often suggests subscribing to this document to his client. Guarantees will be requested from the borrower on his health, his professional activity, but also on his existence as a natural person.
Coverage for various risks
Borrower insurance or real estate insurance provides coverage for various risks linked to the granting of the loan in question. In particular, it takes care of:
- The anomalies which tarnish the purpose of the work. These include, among other things, wall cracks, insulation problems or even infiltration and subsidence.
- Poor workmanship and defects that threaten the solidity of the building.
It is useful to emphasize the fact that coverage for these risks is mandatory. This was particularly established to anticipate the emergence of problems during the duration of the property loan.
The different types of borrower insurance
Borrower insurance comes in several types. First of all, we have the most famous of them: the ten-year guarantee. This form of guarantee covers the risks of hidden defects for a period of ten years. Supervision of the services of construction professionals is also its greatest asset. Secondly, there is the guarantee after work. The latter makes it possible to protect against anomalies and defects observed after delivery of the site. Finally, we have the guarantee of perfect completion. This last type of insurance covers the defects and defects which are listed in the report drawn up upon receipt of the work. The manufacturer will be responsible for repairing these defects.