Mortgage Protection Insurance
Mortgage Insurance Protection Plan
Know all the information you need about mortgage insurance before you purchase a plan
In the market for a new home soon? You may require mortgage insurance.
If you’re purchasing a home with a lower down payment, you will require mortgage insurance. Get educated today with helpful information from HealthRates.ca.
A home is one of the largest purchases you’ll ever make in your lifetime. When you’re ready to begin the purchasing process, the first step is submitting a down payment to the seller. A down payment is usually 20% of the home’s sale value, but there are instances where you may be unable to provide a down payment of that size. When that occurs, you will be required to purchase mortgage insurance.
Read on to learn more and get answers to some frequently asked questions about mortgage insurance.
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What is mortgage insurance?
Often referred to as mortgage default insurance or CMHC insurance because of one of its originators, mortgage insurance is a special kind of insurance that is only required when purchasing a home.
When you submit a down payment for a home and it is under 20%, you will be required to purchase mortgage insurance.
Is mortgage insurance mandatory in Canada?
According to the Canada Mortgage and Housing Corporation or CMHC, if your down payment is between 5 and 19.99%, mortgage default insurance is a must.
It provides lenders with protection if borrowers ever default on their mortgages or stop making regular monthly payments.
Where can I get mortgage insurance?
Mortgage insurance is only available from two organizations, the CMHC and Canada Guaranty. The latter also offers a special program for new immigrants that helps them purchase a new home with as little as 5% down.
For more information and to assist you with different mortgage insurance plans available for you click here.
How much does mortgage insurance cost?
The cost of a mortgage insurance protection policy varies based on your credit score and property location. While most insurers make their products available to all, the costs and rates involved can differ from one location to the next. The type of property you purchase also impacts the cost together with the total amount you cash out for down payment.
What are the benefits of mortgage insurance?
There are sometimes situations where homebuyers are unable to provide a down payment of at least 20% for a new home purchase. This could be because they are newly landed immigrants, they have limited money available, or both. The minimum amount for a down payment in Canada is 5%, and mortgage insurance allows you to get a mortgage with a loan-to-value (LTV) ratio of 95% (5% down payment and 95% of the value of the home). In addition, mortgage insurance also provides you with an affordable interest rate, despite your lower down payment.
Get Informed, Get Insured
Canada Guaranty and the CMHC provide comprehensive mortgage insurance products that can help you purchase your first home with a smaller down payment. For more information and to assist you in their programs, get in touch with us and contact us today.