Mortgage Insurance Requirements in Canada
In Canada, mortgage insurance is required on all high-ratio loans. They are also required on loans where 80 percent or more of the property value is financed through a mortgage. This is to provide protection for the lender against borrowers that can’t pay their loan back for any reason.
This is a guarantee that protects the lender, not the borrower. Also known as mortgage default or mortgage loan insurance, this is a guarantee for the lender. It gives them security knowing that if the borrower defaults on their loan or can’t make payments within 90 days, they aren’t out their investment.
There are a few major insurance companies in Canada. The top three are the Canadian Mortgage and Housing Corporation (CMHC), Genworth Financial Canada, and Canada Guarantee. These are all reliable, trustworthy names when it comes time to buy mortgage insurance on your potential purchase. Furthermore, they provide peace of mind when buying a home.
This industry in Canada has become competitive because of private mortgage insuring. This provides a litany of products for a variety of property purchases and development projects in Canada.
What Mortgage Insurance Means for the Buyer
Mortgage insurance is good for the homeowner, too. They can qualify for residential mortgages with as little as five percent down payment. That allows borrowers to find the home that they want with much less up front.
The guarantee provided by the insurance means that the lenders issuing the home or property financing can net a wider range of home buyers. This provides a greater ease for selling property purchases and developmental projects in Canada.
Insurance is available for commercial mortgages as well. CMHC has an insurance program that allows commercial property purchasers to get up to 85 percent financing. This covers a new build, buy or refinance for a multi-unit property.
To get the best mortgage rates available, a buyer will need the aforementioned insurance and good credit in tandem. Save major money over the life of your term by getting some of the lowest interest rates possible. Any money saved is definitely worth it.