Mortgage insurance is an important consideration for homebuyers in Canada as it can provide added protection against default. With a range of options available, it’s important to understand the different mortgage insurance options so you can choose the right coverage for your needs.
Mortgage Insurance Through Your Lender
The most common type of mortgage insurance in Canada is lender-provided mortgage insurance. This type of insurance is offered through most major banks and mortgage lenders. It protects the lender in the event you default on your mortgage payments. The cost of this insurance is usually bundled into your mortgage payments, and you may be able to choose between a one-time lump sum payment or an ongoing monthly premium.
Canada Mortgage and Housing Corporation (CMHC) Insurance
If you’re buying a home with a down payment of less than 20%, you’ll need to purchase mortgage insurance from the Canada Mortgage and Housing Corporation (CMHC). This type of insurance is required for all high-ratio mortgages, and it protects the lender in the event you default on your mortgage payments. It also helps to reduce the risk of default for lenders, which can help them offer more competitive interest rates.
Genworth Canada Mortgage Insurance
Genworth Canada is another option for mortgage insurance. This type of insurance is similar to CMHC insurance, but it is offered through a private company. It can provide added protection against default, and it can help to protect lenders from default risk.
Private Mortgage Insurance
Private mortgage insurance, also known as PMI, is another option for those buying a home with a down payment of less than 20%. This type of insurance is offered by private companies, and it is designed to protect the lender in the event you default on your mortgage payments. It can be more expensive than other types of insurance, but it can provide added protection for lenders.
Understanding Your Mortgage Insurance Options
Mortgage insurance can be an important consideration for homebuyers in Canada, and there are a few different options available. It’s important to understand the different types of insurance so you can choose the right coverage for your needs. With the right coverage in place, you can help protect yourself and your lender in the event of a default.