Financial Dictionary - Products combined with the mortgage
Products combined with the mortgage
Products combined with the mortgage are all the products that give better mortgage loan conditions.
These products are called linked because they are associated (linked) with the spread. In other words: if you link a product to your mortgage, the spread will go down. Specifically, you could cut up to 1.3% off the spread, which could mean a saving of one 1,000 euro instalment per year.
Until the Mortgage Law came into effect, these mortgage-related products were not regulated, and banks often required customers to take them out as a necessary condition to sign the loan. This law now establishes that, although some of these insurances are mandatory (for example, a life insurance for the person who covers the mortgage payment in the event of their death; or a home or damage insurance that covers the property against any eventuality), no bank can oblige us to take them out with them. That is, you will have to take them out, but not necessarily with the bank you signed the mortgage with.
What are the products combined with the mortgage
They are: home, payment protection and life insurance; credit and debit cards; salary payments and direct debits; pension plans... The list is long, although not all products have the same discount, nor are they equally important. For example, in the case of a mortgage, and as we mentioned before, life insurance and fire insurance are highly advisable (even mandatory, in this case).
How profitable are the products linked to the mortgage?
Even though these products involve certain expenses (opening and maintenance fees, etc.), in general they are usually worth it due to the decrease in your mortgage. But you must always analyse it well, since there are times when it works out better to unlink some of these products, even if the loan spread increases.
How to cancel them
In response to the question of whether it is possible to cancel a linked product, the answer is yes. To do this, you must send your credit institution a letter requesting said cancellation a few months in advance, making sure to include the policy number, the debit account number and your account holder information. You will have to take into account possible charges for cancellation fees; in any case, be sure to properly inform yourself about the conditions of your mortgage in the mortgage registry and take a good look at when, why and how these fees are applied.
Are the combined and linked products the same?
They are similar, but the difference is that linked products are sold independently, allowing the customer to choose those that are of interest to them. On the other hand, combined products are sold as a pack, and are prohibited by the new Law. Whether it is one or the other, the bank must always inform you in writing of the products you take out, and of the consequences that cancelling them may cause. However, the bank offers this type of product to obtain a better mortgage, with better conditions; and if you don't take them out, the interest rate will go up, although you must always be notified of this.