How Insurance Changes Your Buy or Rent Simulation Results

Why insurance is a key driver in any buy or rent simulation

When running a buy or rent simulation, most people focus on the purchase price and the loan rate (taux_pret). Yet borrower insurance (taux_assurance) can account for 10–25% of the total financing cost. Ignoring it will distort any insurance impact simulation and your perceived monthly cost.

This article uses numbers and examples to show how taux_assurance and taux_pret interact in a buy or rent simulation, and how they can shift the balance between owning and renting. It is not personal advice; it is a framework to better read the results of tools like buy-or-rent.net.

What exactly are taux_pret and taux_assurance?

Loan rate (taux_pret)

The loan rate is the nominal interest rate of your mortgage. In 2024, standard 20–25 year loans in Europe typically sit around 3.5–4% depending on profile and lender. In a buy or rent simulation, this parameter drives:

• the total amount of interest you will pay over the term;
• the base monthly payment excluding insurance;
• how fast you build equity in the property.

Borrower insurance rate (taux_assurance)

The borrower insurance rate usually ranges from 0.25% to 0.45% per year of the loan amount for a standard borrower (middle age, non‑smoker, no major medical history). In a simulator, it is generally calculated:

• either on the initial principal (flat insurance on initial amount);
• or on the outstanding balance (decreasing insurance).

This taux_assurance adds on top of the taux_pret to form the total cost of financing. For instance, a 3.6% loan plus 0.40% insurance leads to an effective annual cost close to 4% on the borrowed capital.

How insurance reshapes your monthly payment

Base example: buy vs rent over 20 years

Imagine you are deciding whether to buy or rent the same type of property:

• Purchase price: €300,000 (existing property);
• Down payment: €30,000 (10%);
• Loan amount: €270,000;
• Term: 20 years (240 months);
• Loan rate (taux_pret): 3.6%;
• Insurance rate (taux_assurance): 0.35% on initial principal;
• Current rent: €1,200/month, indexed by inflation/rent index at 2%/yr in the simulation.

Step 1: monthly payment without insurance

At 3.6% over 20 years on €270,000:

• Monthly payment excluding insurance ≈ €1,590;
• Total interest over 20 years ≈ €112,000.

Step 2: adding borrower insurance

With a 0.35% taux_assurance on the initial €270,000:

• Annual premium: 270,000 × 0.35% = €945/year;
• Monthly premium: about €79/month.

The total monthly cost (loan + insurance) becomes:

• €1,590 + €79 = €1,669/month.

Compared with the €1,200 rent, your monthly cost rises by:

• 1,669 – 1,200 = €469/month.

In a buy or rent simulation, these extra €469 can be compared to the potential financial investment you could make if you stayed a tenant and invested the difference at a given investment rate (for example 4%/yr in a diversified ETF portfolio).

Insurance can be 20%+ of your total financing cost

Computing the total insurance cost

Over 20 years at €79/month:

• €79 × 240 months = €18,960 of insurance premiums.

Interest cost reminder: ≈ €112,000.

Insurance therefore represents:

• 18,960 / (112,000 + 18,960) ≈ 14.5% of the combined interest + insurance cost.

In some situations (lower taux_pret, higher taux_assurance, older borrower), insurance can exceed 25% of total financing costs. In a buy or rent simulation, that can flip the result, especially if:

• your holding period is short (5–7 years);
• you compare buying with a strong “rent + invest” strategy at a good investment rate.

Comparing two insurance rate scenarios in the simulator

Scenario A vs Scenario B

Take the same project but change only the taux_assurance:

• Loan amount: €270,000;
• Term: 20 years;
• taux_pret: 3.6%;
• taux_assurance A: 0.20%;
• taux_assurance B: 0.45%.

Scenario A: insurance at 0.20%

• Annual premium: 270,000 × 0.20% = €540/year;
• Monthly premium: €45/month;
• Total insurance over 20 years: 45 × 240 = €10,800;
• Total monthly payment (loan €1,590 + insurance €45) = €1,635/month.

Scenario B: insurance at 0.45%

• Annual premium: 270,000 × 0.45% = €1,215/year;
• Monthly premium: €101/month;
• Total insurance over 20 years: 101 × 240 ≈ €24,240;
• Total monthly payment: 1,590 + 101 = €1,691/month.

Impact on monthly payment and total cost

Difference in monthly payment between A and B:

• 1,691 – 1,635 = €56/month.

Difference in total insurance cost over 20 years:

• 24,240 – 10,800 = €13,440.

In a buy or rent simulation, those €56/month can be viewed as extra saving capacity if you stay a tenant, or as potential savings if you negotiate a better insurance deal (for example via insurance delegation). Over 20 years, investing €56/month at 4%/yr compounds to more than €20,000, enough to offset a significant part of other ownership costs (notary fees, property tax, renovations).

How taux_pret and taux_assurance interact

Lower loan rate vs higher insurance rate

Consider two financing offers for the same property:

• Offer 1: taux_pret 3.6%, taux_assurance 0.25%;
• Offer 2: taux_pret 3.2%, taux_assurance 0.45%.

On paper, Offer 2 looks better because of the lower loan rate. But the more expensive insurance may eat away the gain. On €270,000 over 20 years, you might get roughly:

• Offer 1: interest ≈ €112,000, insurance ≈ €13,500;
• Offer 2: interest ≈ €98,000, insurance ≈ €24,240.

Total financing cost:

• Offer 1: ≈ €125,500;
• Offer 2: ≈ €122,240.

Offer 2 still wins, but the difference is much smaller than what the loan rate alone suggests. In a buy or rent simulation, this narrow gap can be offset by:

• higher‑than‑expected property tax;
• rent increases that are lower than the inflation assumption;
• a stronger investment return as a renter.

Holding period: why insurance weighs more if you sell early

Example: resale after 7 years

Many buy or rent simulations assume you will sell after 7–10 years. On a 20–25 year mortgage, that means you do not enjoy the full benefit of long‑term equity build‑up, but you pay insurance from day one.

Using our example (€79/month of insurance) over 7 years:

• €79 × 84 months ≈ €6,636 of insurance premiums.

In the first years, interest makes up a large share of the monthly payment; adding insurance on top makes the early years of ownership relatively expensive versus renting. In a buy or rent simulation with a short horizon, the weight of taux_assurance becomes proportionally higher.

The classic mistake: ignoring insurance in your comparison

Comparing rent to mortgage without insurance

Many households compare:

• Rent = €1,200/month;
• Mortgage payment (quote from the bank) = €1,590/month, without insurance.

They conclude: “€390 more to be an owner, that’s fine”, but they forget to include:

• borrower insurance (say +€80/month);
• property tax (for instance €1,200/year, i.e. +€100/month);
• non‑recoverable service charges and maintenance (for example +€100/month).

The real monthly cost jumps from €1,590 to:

• 1,590 + 80 + 100 + 100 = €1,870/month.

Against €1,200 rent, the gap is no longer €390 but €670/month. In a complete buy or rent simulation, this difference is crucial: if you are disciplined, staying a tenant and investing €670/month at 4–5%/yr can build substantial financial wealth.

Using a simulator to test insurance impact (taux_assurance)

Setting up loan rate and insurance rate correctly

A robust buy or rent simulator, like buy-or-rent.net, lets you:

• input the loan rate (taux_pret) from your mortgage offers;
• tune the insurance rate (taux_assurance) based on your age, health and quotes;
• run multiple scenarios: expensive insurance vs negotiated insurance;
• see the effect on monthly cost, total financing cost and your net worth over time.

For instance, you can launch three buy or rent simulations:

• Scenario 1: taux_pret 3.6%, taux_assurance 0.45%;
• Scenario 2: taux_pret 3.6%, taux_assurance 0.25%;
• Scenario 3: remain a renter and invest the monthly savings at 4%/yr.

The simulator will show, year by year, your net wealth (property + savings minus remaining debt) in each scenario. You will clearly see how just a few tenths of a percent on taux_assurance can move the needle in your buy or rent decision.

Putting insurance in context with other key parameters

To interpret an insurance impact simulation correctly, you need to look at insurance alongside:

• Notary fees: about 7–8% in older properties, 2–3% in new builds, paid upfront;
• Property tax: from €450 to more than €5,000/year depending on city, with annual revaluation that may outpace inflation;
• Annual rent increase: capped or indexed by law, often linked to inflation;
• Investment rate: expected return if you invest while renting;
• Annual inflation: which erodes the real weight of your fixed mortgage payment;
• Early repayment penalties: up to 3% of remaining principal or six months of interest.

Within this framework, the pair taux_pret + taux_assurance is just one block of the equation, but it is also one of the few elements you can negotiate (bank competition, insurance delegation). Each 0.10% you manage to shave off can significantly improve your long‑term results in a buy or rent simulation.

Conclusion: always include insurance in your buy or rent analysis

Borrower insurance is not a minor detail; in a realistic buy or rent comparison it can:

• account for 10–25% of total financing cost;
• raise your monthly cost by dozens of euros;
• weigh more heavily if you plan to sell within a few years;
• shift the outcome of your buy vs rent comparison, especially if you have strong investment alternatives as a tenant.

This is why you should test several values of taux_assurance and taux_pret instead of relying on a single bank quote. The better choice between buy or rent will always depend on your situation (income, job stability, family plans, risk tolerance). To compare scenarios objectively, using a dedicated simulator is essential.

This content is for information only and does not constitute personalized financial advice. To see, with real numbers, how insurance and loan rate affect your project, simulate your situation on buy-or-rent.net.