Financial Dictionary - Discounted mortgages
The mortgage discount is the amount of interest that will be discounted by the bank when arranging a mortgage loan, and also purchasing other bundled products from the financial institution. Also known as discounted mortgages. Obtaining a discount on the loan is a good option to lower the price of the loan; do not forget that you are making a commitment that will last for a long time, and the less you are charged, the easier you will be able to pay.
Discounted mortgages have a minimum interest rate you can benefit from if you purchase all of the bundled products. And they also have a maximum interest: the amount you would pay if you had not taken out any of these products.
The products that can reduce your mortgage are ones such as home insurance, credit or debit cards, direct debit of your salary and payments, pension plans, life insurance for the mortgage holder and payment protection and the current account. As we can see, the options are multiple and vary from one product to another: for example, it is advisable (indeed compulsory) to take out a damage insurance policy that guarantees the debt will be repaid in the event of fire, or a life insurance policy that pays out if the mortgage holder dies.
These associated products were unregulated and could be offered on a mandatory basis before the Mortgage Law entered into force. Since the Mortgage Law entered into force, it has allowed certain compulsory products (damage insurance or life insurance for the mortgage holder) to be taken out with third parties, and not necessarily with the person granting the loan.
By how much will you be able to reduce the interest rate with the products bundled with the mortgage?
The products bundled with the mortgage can entail a discount in the mortgage of between 1% and 1.3% of the spread (i.e. around 1,000 euros per year) compared to the same mortgage without these discounts. You should also bear in mind that the more bundled products you take out with the mortgage, the greater your loyalty, and therefore your discount, this way you will get a mortgage with better conditions.