Among the different types of mortgage, the flexible loan is backed by a traditional amortizable loan. Offered by a majority of lending institutions, it allows the borrower to anticipate the evolution of his income in order to manage his monthly payments with more flexibility. In short, it is a customizable loan offering many advantages for the subscriber.

How does the flexible loan work?

We talk about a flexible loan, but it is more an option backed by a conventional mortgage than a loan in its own right. This option allows a subscriber to obtain a credit, the repayment terms of which may change according to changes in his finances.

Few borrowers can secure a fixed and identical income during the entire mortgage amortization period. In 15, 20, 25 or 30 years, a lot can change: income can go up or down, unexpected cash flows can occur, the subscriber can go on a period of unemployment, etc.

The modular home loan adapts to the borrower’s situation: the borrower can modify his monthly payments according to his income. This flexibility constitutes the DNA of the modular loan, depending on the conditions set between the subscriber and his bank when the loan offer is issued, on a case-by-case basis.

What can we do with the modular home loan?

Concretely, the modular loan allows:

• Increase or decrease the amount of the monthly payments to adapt to a change in economic situation (sudden rise or fall in income, significant cash inflow, etc.);
• To suspend monthly payments for a short period to compensate for a temporary difficulty, such as a job loss (the total reimbursement period being limited to an extension of two years);
• To repay the modular home loan in advance, in part or in full. This type of repayment is provided for in loan contracts but is often subject to penalties. A borrower who anticipates large cash receipts can nevertheless negotiate the possibility of an early repayment without costs, for a limited amount.

Generally, financial institutions offer a flexible loan option to borrowers, because they are aware that a loan of this size must take into account the vagaries of life (reason for which borrower insurance, if it is not a requirement is still a constraint in fact).

Actually, the phrase “credit without unemployment insurance” is not very common, since most banks do not mean unemployment insurance, which is deducted from the salary, but the residual debt insurance, which can optionally be taken out for a loan and in the event of unemployment To protect borrowers from financial ruin. A loan without unemployment insurance is therefore possible at any time under certain conditions.

Is it necessary to take out residual debt insurance?

A residual debt insurance can – but does not have to – be taken out. The banks cannot request this from the borrower. However, you can base your credit decision on this. For example, they will only be granted a loan without unemployment insurance if the available security is sufficient.

The residual debt insurance is supposed to enhance these securities in principle and to additionally secure the loan. If it should happen that you become unemployed during the repayment phase, the insurance will take over the outstanding installments and pay them to the bank. A financial disaster can thus be avoided.

Where can the residual debt insurance be taken out?

If you do not want to take out the loan without unemployment insurance, you can take out residual debt insurance in many places. Most of the banks offer this insurance along with the loan application. However, you are not forced to accept the offer.

Rather, you can take out insurance with any other insurance company, since it is not linked directly to the bank, but always only to the loan amount. A comparison of the different offers can be worthwhile here. Because the premiums for the insurance can fluctuate quite a bit. And if you don’t compare here, you can count on it in the end.

Conclusion

A loan without unemployment insurance is possible at any time. Provided that you can meet all the conditions for the loan without the insurance. Even if the bank offers and recommends insurance, you are not forced to take out insurance. However, the bank may not then approve the loan. You should therefore always make individual decisions and get good advice. Because in the end it always counts the loan and its payment, which is aimed for and which is somehow expected.