Many customers are confused about exactly what is mortgage insurance. Sometimes it is confusing as to what are the banks really talking about when they bring this up. There are different types of insurance that are required or offered when you purchase a home. These are the types of insurances that you will hear about when purchasing a home or getting a mortgage.
This is an insurance policy that protects the bank if you should default on your mortgage. So basically if you stop paying your mortgage and the bank needs to recall your mortgage CMHC, Genworth, or Canada Guaranty will guarantee the mortgage. This allows you, the home buyer, to purchase a home sooner, because without mortgage insurance you would need 20% down payment minimum to purchase a home. Also many consumers don’t realize there are different products that CMHC, Genworth, and Canada Guaranty offer to help the homebuyer purchase a home in different situations such as:
These different products help you, the homebuyer, become a homeowner in Canada sooner than if you had to wait and save up 20% down payment. In some markets compared to the earnings, 20% down payment would be very difficult to save. You can port the insurance premiums with you to your next home purchase (certain rules apply) and with a mortgage broker/associate we can help you pick the best product for you and also educate you on the different products available to you.
In Canada there are three companies offering this kind of insurance:
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There are lots of tools that will help you understand insurance.
They all have almost similar products and also offer unique products for self-employed people. If you still have questions about mortgage insurance, don’t hesitate to call or email us today.