The arbitration in terms of loan insurance has its importance on the cost of mortgage financing. The rate for comparing the costs of loan insurance is the TAEA, not to be confused with the APR for mortgage loans.
From interest rate to APR
Difficult for the layman to find their way in the middle of these acronyms. It is when we look at the financing of a project – in particular a real estate purchase – that we concretely confront interest rates. The loan interest rate is used to calculate the cost of a loan. Expressed as a percentage, it applies to the amount borrowed in order to determine the remuneration intended for the lending institution. The annual effective annual rate, or APR, is the one that includes all the costs associated with taking out a loan, including loan insurance. It is thanks to this rate we can compare two loan offers between them.
TAEA, the loan insurance indicator
The APR therefore includes the cost of borrower insurance, in particular in the case where this insurance is taken out with the bank (group insurance). The TAEA represents the cost of insurance in rates, which makes it possible to standardize loan insurance proposals. This makes it easier to compare between several loan insurance solutions. In a way, it plays the same role as the APR for the cost of the mortgage. The TAEA formula was defined by decree of October 14, 2014. It is the APR with insurance – the APR excluding insurance.
TAEA allows the competition of loan insurance
Once we know the TAEA, it is then possible to bring competition between establishments, at several times: from the subscription of the mortgage thanks to the Lagarde law which allows the delegation of insurance, during the first year of the loan thanks to the Hamon law, and finally on each anniversary date of the signing of the loan offer according to the Bourquin law. Comparing loan insurance online then allows you to get an idea of the possible offers based on your profile. A loan insurance broker can also assist the borrower in choosing a loan insurance at the best price while respecting the guarantee equivalents.