Mortgage Loan Insurance for your Dream Home
Rising home prices and other living expenses make saving for a down-payment on a home difficult. The good news is that with the right lender or mortgage broker, you can get help making home ownership come true.
In fact, with proactive solutions from mortgage insurance, you can buy a home sooner than you think.
Learn how you can make your dream home a reality with mortgage insurance.
What is Mortgage Insurance?
Mortgage insurance comes in many forms. If you have less than 20% down-payment on your home, the law requires you to get mortgage default insurance. It is designed to protect the financial institution from loan default and to keep interests low.
Mortgage insurance offers innovative and affordable options to Canadians for buying a house. Also referred to as mortgage default insurance, it makes it possible for Canadians to buy a home even with a lower down-payment. Qualified borrowers can buy a home for as little as 5% down-payment if the property is below $500,000. Mortgage Default Insurance Qualifications
- Up to a maximum amortization schedule of 25 years.
- A buyer is required to pay a higher down-payment for properties worth $500,000 – $999,999. 5% is the minimum required down payment for houses below $500,000, while the amount above $500,000 until $999,999 requires 10%.
- Mortgage default insurance is not required for homes worth over $1 million because a buyer needs to pay at least 20% down payment.
Our mortgage broker partners can help you with the costs and benefits of mortgage insurance for your home loan.
Three mortgage default insurance companies offer mortgage default insurance in Canada – the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial and Canada Guaranty.
You have other mortgage protection insurance options to consider to find the best mortgage insurance product for your needs. Because your home and your family’s security are important, it is advisable to speak to mortgage insurance professionals about your needs.
Mortgage Life Insurance
Mortgage life insurance can be required by banks for their mortgage loans. But although they require it, you are not under any obligation to purchase the insurance from them.
You have the option to shop around for better mortgage life insurance coverage and rates.
Mortgage life insurance is also called decreasing term life insurance. Your premiums are the same but coverage decreases as the balance of your mortgage declines. Banks offer this type of insurance.
In short, death benefits decrease as your mortgage goes down and benefits are paid to the bank.
20-Year Term Life Insurance
A better option to mortgage life insurance is 20-year term insurance. Premiums and level of coverage remain the same throughout the term. This is also a cheaper insurance policy with lower premiums.
You can compare costs of mortgage life insurance and 20-year term life insurance with our free quotes.
Mortgage Protection with Critical Illness
Your home is your most valuable investment. What happens if you get diagnosed with a critical illness and your mortgage is not yet paid?
According to the Bank of Canada, 2/3 of Canadian debt is residential mortgage. As a measure of protection, homeowners can get mortgage protection with life insurance and critical illness coverage from insurers.
Mortgage insurance pays for the outstanding mortgage in the case of death, accident, or a terminal illness up to a maximum amount.
Mortgage Life Vs. Mortgage Protection with Critical Illness
The most significant difference between mortgage life and mortgage protection with life and critical illness coverage is the beneficiary.
In mortgage life insurance, the lender gets paid the insurance benefits and the coverage declines as the outstanding mortgage declines.
In mortgage protection with life and critical illness, the insurer pays the insured a lump sum which can be used for mortgage payments or other expenses. In other words, more than the mortgage is taken care of and life insurance pays a tax-free sum to the beneficiary in case of death.
Other key differences between these 2 types of insurance:
| Mortgage Life Insurance | Mortgage Protection | |
| Can Insurance Move with your Mortgage? | Not automatic | Yes |
| Flexibility Can plans be changed with your needs? |
No | Yes Term Life can be converted to permanent life at any time |
| Cost and Level of Cover | Cost remains level but coverage decreases over time | Cost and level of cover remains the same |
With mortgage life insurance, coverage will cease when your mortgage is paid off. If you need continued coverage, the cost will be higher and acceptance by an insurer is subject to your age and health status.
With mortgage protection with life and critical illness coverage, your coverage won’t stop even if you repay your mortgage within the insurance term. It can also be converted to permanent life insurance coverage that lasts a lifetime.
Compare Mortgage Protection with Free Mortgage Insurance Quotes
Mortgage life insurance is designed to help pay off your mortgage in the event of death. It is not a pleasant subject to think about but it is certainly more unpleasant if your family should become homeless.
Many of these policies decrease with your mortgage and may often be less than ideal if you refinance in the future.
You can get more options with our free mortgage life insurance quotes. You can also speak with an advisor to be able to make well-informed decisions.
Our quotes are free and no obligation. We hope you will take advantage of this opportunity to connect with the best mortgage insurance professionals.
Fill-out our quick online form and receive competitive mortgage insurance offers from experienced and reliable professionals.