Termination of life insurance - bank refuses consent

Could it be that the life insurances are linked to the loan? That’s just a thought, I’m not an expert in contract matters. Bound until 2018. Cancellation of the loan with VFE is not possible because no sale of the property is planned.

I cannot answer that like this. The contract states that the repayment is to be made through the 2 LV. And there is an interest rate lock until 2018. But that is exactly what the prepayment penalty is for, so that the bank does not lose out on the missed profit.

No. A loan can only be terminated before the expiration date if a sale takes place. Otherwise, not.

The generation of my parents often used this financing model (70s): only interest is paid, a life insurance policy is taken out for the repayment at the end. I am of the opinion that this creates a linkage. As I said: I'm not sure, but it would be worth asking the bank in your example.

Good. I would understand that too. But I only want to pay for the property once, not twice. Why do they then need double security? The money is already there because it has been saved. It would not be lost to the bank.

Outstanding claim = €45,000

Already accumulated insurance sum, or current surrender value upon cancellation of the LV:

Insurance 1 = €55,000

Insurance 2 = €30,000

...

Now the borrower wants to cancel Insurance 1 in order to reduce the monthly burden and repay the loan early.

Sounds almost as if the insurances are also being used as collateral for the loan. If it is not ensured that the payment from Insurance 1 is also used to repay the loan, the advisor might see the following problem: The remaining Insurance 2 after the cancellation of Insurance 1 would only cover two-thirds of the outstanding claim. In addition, the question arises whether the stated amount is the guaranteed payout amount, or if surpluses were included, which might possibly be lower at maturity.

Just go to your bank advisor and discuss this with him on site. Misunderstandings can easily arise over the phone.

I see a catch: The loan agreement is (also) secured by a land charge. This means a loan with a term of 10 years during the fixed interest period is non-cancellable.

Subject matter professionally covered.

The alternative of a blocked account is nonsensical, as the return on the life insurance will still be significantly above the return on the alternative investment.

The only two reasons that make sense and have a chance of success would be property transfer/sale or lack of debt service ability for the two life insurances.

I would let it continue as is, provided the 500 euros do not suddenly become painful due to loss of income. You do not have an economically sensible alternative.