Mortgage Insurance in Canada is designed to protect both lenders and borrowers in the event of unforeseen circumstances affecting mortgage repayment. It comes in two main forms: mortgage default insurance and mortgage life insurance.
1. Mortgage Default Insurance
Often required for homebuyers with less than a 20% down payment, Mortgage Default Insurance protects the lender if the borrower defaults on the loan. It is provided by organizations like the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial, and Canada Guaranty.
Key Features
Mandatory for High-Ratio Mortgages: Required for loans with down payments between 5% and 19.99%.
Cost: Premiums range from 2.8% to 4.0% of the mortgage amount, usually added to the mortgage balance.
Benefits: Enables homebuyers to purchase homes with smaller down payments, increasing access to homeownership.
2. Mortgage Life Insurance
Mortgage Life Insurance ensures that the remaining mortgage balance is paid off if the borrower passes away. Unlike mortgage default insurance, which protects the lender, mortgage life insurance protects the borrower’s family, ensuring they are not burdened with mortgage debt.
Key Features
Voluntary Coverage: Optional for homeowners looking to protect their family.
Coverage Amount: Pays the remaining mortgage balance directly to the lender upon the insured’s death.
Declining Benefit: Coverage amount decreases as the mortgage balance is paid down.
We can help you with your Mortgage Life Insurance needs. Contact us today to learn more and secure peace of mind for your family's future.