Some financial institutions deduct the interest rate applicable in each review period, according to our relationship and associated products contracted in the previous year.
This practice is perfectly legal . What is not legal and, unfortunately, many financial institutions continue to do so, is to condition the granting of the mortgage to the contracting of insurance and other products or services.
Mortgage with the minimum possible link
If you are looking for a mortgage with the minimum possible link, do not hesitate to request information from our collaborating brokers by filling out our form .
The bank uses its bargaining power to try to connect as much as possible, but this reality should not hide the obligation to hire more expensive insurance in exchange for obtaining the mortgage. The more business we have with the entity, the more money they will earn with us. The mortgage loan has always been the easiest way to capture a new client, either by granting a mortgage to buy a house or by subrogation; If in addition to the loan we offer more business, many financial institutions are willing to offer us better interest rates.
Cost of the linked products
We have to be clear about the cost of the linked products and make numbers, to see if it is convenient for us not to have them contracted, despite losing part or the total of the bonus, for the extra cost that this entails. The reduction of the quota should compensate for their hiring.
The most common products and links that subsidize the interest rate are:
Direct debit of payroll and domestic receipts, which has no cost (there are also payroll accounts with very advantageous conditions).
Hiring credit and debit cards (with a certain annual expense, usually).
Have home and life insurance with the insurer that the bank itself selects. The problem is that they usually have more expensive premiums than the same insurance at an independent insurer.
Annual contributions to a pension plan or investment fund. Here the problem is that they are not competitive and we lose profitability.
The interest rate bonus
In any case, the interest rate bonus and the products that are taken into account must be well specified in the mortgage loan deed. The interest rate that will be applied to us is calculated in each review, based on what we had contracted in the previous year.
Very important that we review it, since it is not strange that they apply a higher interest rate than our share. They may have passed us the payroll every month but not as a payroll and the bank has not automatically taken it into account.