Natasha Shaw

What is Mortgage Insurance?

Also called mortgage default insurance, it applies when an applicant(s) purchases a home with less than 20% down payment (a.k.a. High Ration Purchase Financing) or refinances above 80% LTV (loan to value).

In these situations, mortgage default insurance is NOT optional.  You cannot obtain a mortgage in Canada with a loan to value above 80% without mortgage default insurance.  Premiums are usually rolled into your mortgage so you pay them along with your monthly mortgage payments, although it is possible to pay them upfront with cash.

The mortgage applicant pays the premiums for this insurance but the policy actually belongs to the bank and is for the benefit of the bank - if there was default on the mortgage.  The benefit to the applicant is the ability to be able to obtain a mortgage without a 20% down payment or in a situation deemed “risky” by the lender or bank.

How Do I Get Mortgage Insurance?
Currently there are three mortgage default insurance options in Canada:

• CMHC (Canadian Mortgage Housing Corporation)
• Genworth Financial Canada and 
• Canada Guaranty Mortgage Insurance Company 

Their premiums are generally very similar but each insurance company varies slightly on the guidelines pertaining to the different mortgage programs they participate in, therefore sometimes one insurer may be more suitable than another in certain situations.  Your licensed Mortgage Professional and your lender will select the proper insurer for your particular mortgage when they are arranging your loan.

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• Home Insurance

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