How mutual insurance affects (really) your profitability

Do you think you have completed your investment as a chef, with a beautiful monthly payment and a canonical rate? Too bad, it remains a detail that almost nobody clearly explains to you: the borrower insurance. He who squeezes slowly, but certainly your profitability. It remains inside, because after reading it, you will never see your «net performance» in the same way.

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Mutual insurance: this underground passenger of your credit

When your mortgage sign, the bank makes you kindly know that insurance is essential. Protection in the event of an accident, disease, disability … on paper, it is a good thing. Except that this small «security» has a cost, and not just a little.

On average, the insurance represents between 0.20 % and 0.50 % of the amount borrowed per year. On a credit of € 200,000, you can then add up to 20 000 € insurance for the entire duration of the loan. Punta, right? And this is not a trivial supplement: this amount directly crosses the profitability of the investment for rent.

The worst? Most of the investors do not even recalculate their net performance after the integration of this accusation. Result: they think they have a «positive cash flow» operation when they actually work at a loss.

Insurance rate: like the Tou Trap Bank (gently)

You have probably compared the bank credit rate to the nearest point. But your insurance rate? Not sure. Because contrary to what you let you believe, the real war is not on the loan rate, it is in insurance.

Many banks still impose their group contract, with a single rate that is not always suitable for your profile. Result: it exceeds the guarantees sometimes unnecessary. According to a UFC-CA study, choose, The borrowers could save up to € 15,000 By opting for an insurance delegation, that is to say by choosing an external contract.

Small subtle reminder: even if you are young, healthy and non -smoker, pay the complete vase to cover even the risks of more «sensitive» profiles in bank contracts. And this, of course, nobody tells you when signing.

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Insurance and cash flow: the domino effect you had not foreseen

When calculating your cash flow, intact the perceived and fixed rents … but if you forget the insurance, your part of the forecast goes to a lap. Worse again: the insurance is often indexed, then increases every year, which weighs a little heavier on the budget over time.

Imagine an expected net rental of € 850 for € 750 in charges (credit + co -ownership baskets + real estate taxes). With a difference of € 100, you feel comfortable. Except for the fact that if your insurance teases € 50 per month, you exceed the margin brand of € 50. An unexpected (holiday for rent, urgent repair) and here you are in red.

In short, this poorly expected small detail can transform a «super investment» into a bomb bomb.

Good practices to limit the impact of mutuoting insurance

Fortunately, you are not condemned to be deceived. By Lemoine law, you can Change your insurance at any time To improve and cheap. Do not remain attached to the «Lazy» basic contract: every euro saved the cash flow is saved.

Another tip: Really regulates the guarantees to your project. If you invest for rent, you don’t necessarily need concrete coverage provided for a main residence. Do the right questions: do I need a reinforced itt coverage if my rents refund the credit? The simple insurance on death may be enough and save you great.

Finally, he thinks of renegotoning regularly. The market evolves rapidly and insurers align their prices to the market share. It would be a shame to continue paying 40 % more expensive than your neighbor just because you haven’t looked for five years.

My opinion: because the borrower insurance must become your new financial reflection

When we talk about real estate investments, we fill your head with «position», «positive cash flow», «latent added value» … but very few teach you to look for All The lines of your Excel table with a critical eye. And the insurance of the borrower, precisely, is one of these invisible traps.

Those who are successful in the long term are those that trace Every euro spent unnecessarily. Because in the real estate sector, don’t win when you buy: Win when you master your expenses over time.

So now that you know, ask yourself this brutal question: How much mutual insurance does it really cost you on your investment? And above all, what are you going to do to regain control?

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If this article has opened your eyes (or put a benevolent slap), share it around you, comment and tell me in the comments: Have you ever thought about renegotiating your borrower insurance?

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