What do loans protect against and how much do they cost

Misfortunes go about people, including borrowers. What can you do to minimize the risk of exposing yourself and your loved ones to repayment when taking out a bank loan, when we encounter a random event that causes difficulties in the normal servicing of the loan repayment?

It is worth getting to know the insurance offer provided with loans, which are quite commonly offered in banks. What are the pros and cons of buying a policy? We analyzed the offer proposed by the players most important in the domestic yard. We invite you to read.

What do insurance packages protect us from?


As you can easily guess, the range of insurance coverage offered for banking products, such as loans and credits, is quite diverse. We decided to take a closer look at these proposals and specify the scope of insurance protection that is offered to us by individual banks when taking on credit obligations. We checked that by taking insurance we gain protection in:

  • Good Finance in the event of death, permanent invalidity, temporary inability to work and loss of a job, and in the case of the extended insurance option also in the event of death as a result of an accident (accident), serious illness and total inability to earn;
  • Honest Bank, where we are protected in the event of death or death as a result of an accident, serious illness, loss of income or hospitalization, inability to work or disability,
  • Cooperative Bank in the event of job loss, hospital stay, death as a result of accident insurance or loss of earning capacity,
  • GBank, where we are protected in the event of death due to accident, incapacity for work or serious illness,
  • Good Lender in the event of death, loss of earning potential, loss of a job, serious illness or hospitalization.

Protection costs and exclusion of liability


The scope of potential protection in the event of events that could entitle us or our relatives to benefit from an insurance benefit is quite wide.

As always, however, there is the issue of the cost of such collateral in the event of events that hinder or prevent repayment of the loan. The table below contains information on the price of insurance proposed by banks for individual loan offers.

However, the issue is when the insurer may refuse to pay compensation. Most often, protective liability is removed from the shoulders of an insurance company when we apply for unemployment benefit that occurred as a result of contract termination by mutual agreement.

We have even less chance of compensation when, for example, we have lost our health and apply for a benefit in the event of a serious illness or hospitalization.

Priceless security?


It should be borne in mind that in a few months banks will be forced to comply with the latest regulation of the Good Finance Investment Corporation (GFIC), which decided to organize the Polish bancassurance market and reduce the banks’ appetite for additional earnings when offering insurance protection.

This regulation, Recommendation U, will allow a more transparent change in the cost of protection and is intended to shorten the practice in which the lion’s share of the protective premium (in extreme situations even more than 4/5) paid by the client is collected by the bank as remuneration for the sale of insurance.

The scope of potential protection that we gain by taking out insurance offered when taking out a loan or cash loan is considerable. Unfortunately, the costs of such security are equally great. It is always worth calculating whether we can afford such an additional cost, except for interest and commission.

Remember, however, that insurance is always included. You never know what might happen to us when you pay the debt. Cessation of regular loan repayment can expose us not only to financial unpleasantness, but also to even cancel our dreams about our own apartment. The prudent borrower has always been insured.

A home renovation loan


The most common method of financing renovation of a house or apartment is a loan. To buy an apartment, we take a mortgage and take a separate cash loan for renovation.

The great advantage of cash loans is that the property you want to take out for does not have to be your property. This can be particularly useful when the apartment belongs to, for example, your partner, and you only want to financially support his device.

Home renovation loan – mortgage

Home renovation loan - mortgage

A mortgage for home renovation can, under certain circumstances, be more profitable than a cash loan. This is because the interest rate for such a loan is much lower than for a cash loan. The difference we are talking about can reach as much as 6%!

In addition, hardly anyone knows that a mortgage for a home renovation can be taken for a very long period, eg 30 years. This means that the monthly installment spread over such a long time will not be too much of a burden to our home budget.

This is an extremely big advantage, because with a large loan value (maximum 60% of the property value), the monthly installment will not be USD 2,000, only about half of it. It is also worth familiarizing yourself with the topic of how to take a mortgage step by step, which will help to dispel many doubts.

Advantages of a mortgage granted for a house renovation:

  • maximum loan amount (for a property worth at least USD 350,000, the maximum mortgage amount will be higher than for a cash loan),
  • credit length,
  • low interest rate.

Mortgage with renovation – is it possible?

Mortgage with renovation - is it possible?

Banks allow you to combine a mortgage to buy a home with a mortgage for refurbishing your home. However, remember that a mortgage plus renovation may not always be a good option. When combining two products with each other, banks will require a larger down payment.

Most often, the amount of the contribution is calculated jointly for the purchase of real estate and renovation purpose. This means that when deciding to buy an apartment whose value is 250 thousand. USD and matching 50,000 USD, which we allocate for renovation purposes, we will have to accumulate with a 10% own contribution of 30 thousand. USD (25,000 for the purchase of an apartment and 5,000 for renovation).

However, if the bank requires a 20% own contribution from us (the most common scenario), then we will have to put up as much as 60,000 dollars.

Home renovation loan – how to get it?

Home renovation loan - how to get it?

Wondering how to get a cash loan? All you have to do is go to the bank of your chosen bank or apply online. To complete the application you will need such documents as: ID card and income statement.

The whole process will take you a few minutes, and the credit decision is issued within 10 minutes. If you are a regular customer of the bank and you have your personal account there, then you may not need your earnings certificate at all.

Remember to compare the offers of different banks before submitting your application. It is worth checking the interest rate and the final value of the loan. All this has a big impact on the size of the installment you will pay.

However, if you are thinking about a larger amount and are thinking about a mortgage, you will have to be patient during the first stage. The procedure itself can take a long time, and the credit decision is not issued as quickly as in the case of a cash loan.

Some banks wanting to speed up this process allow their clients to contact online – then the form and all documents are sent electronically to the bank, and you only appear once in the outlet to sign the contract. To properly complete the credit form, you will need several documents:

  • a document with a photo confirming your identity,
  • property deed and mortgage entry,
  • property valuation,
  • repair cost estimate for mortgage loan (renovation plan),
  • invoices and repair settlements,
  • credit insurance: for life, loss of job or real estate against fire and other random events.


You can only use your mortgage to renovate your home or renovate your home. With the funds raised, you can, for example, buy household appliances, repair the installation or spend them on remuneration for a renovation company. Under no circumstances can you spend these funds on, for example, car repairs.

The last stage is the launch of the loan. After analyzing all the documents and checking your creditworthiness, the bank will issue a credit decision and agree with you the date of signing the contract and launching the loan.