The Benefits of Mortgage Insurance

Mortgage insurance Magnifying glass

There are many reasons why mortgage insurance can be of benefit to homeowners, particularly those buying a home for the first time or those aiming to live green. For starters, having mortgage insurance will incentivize lenders to offer you a lower interest rate on your mortgage.

Weigh the options: calculate what you will be paying in interest on a mortgage without mortgage insurance and what you will be paying monthly on your mortgage with mortgage insurance. With 25 per cent down, mortgage insurance premiums will equate about 0.5 per cent of your loan amount.

Mortgage Insurance for First-Time Homeowners

Mortgage insurance allows a greater number of Canadians to become homeowners. If not for mortgage insurance, lenders would not be so agreeable in granting 95 per cent financing to those purchasing homes with only five per cent down, and definitely not in cases where financing is provided with no money down.

Mortgage insurance guarantees lenders that in the event the mortgagee defaults on their payments, they will not be punished for it. In the majority of cases, if a home purchaser is contributing less than 20 per cent of the property's value toward a down payment, mortgage loan insurance is mandatory.

Mortgage Insurance for Energy-Efficient Properties

In Canada, the top two purveyors of mortgage insurance are the Canada Mortgage and Housing Corporation (CMHC) and Genworth Financial Canada. Both offer major discounts to those who purchase an energy efficient home, purchase a home and make energy-saving renovations, or to those who make strides to curb their energy use in their current residence. These benefits can include:

  • up to 10 per cent of premiums refunded
  • extended amortization period (up to 35 years) without surcharges
  • Genworth's online discount program for commonly purchased household items
  • calculations of savings from reduced heating costs

Mortgage Insurance for New Residents to Canada

Mortgage insurance also makes it possible for new immigrants to Canada, who have no credit or income records in the country, able to qualify for a mortgage with as little as five per cent down. Genworth offers the New to Canada Mortgage Insurance Program, the features of which include:

  • Opportunity to purchase a home in a timely manner, become economically established in the country, and start building equity
  • Financing up to 95 per cent of the property value
  • Flexible mortgage options: adjustable, fixed and variable rates are available
  • Individual review of applicants
  • Available up to three years after arrival to Canada
  • No income minimums necessary to qualify

The CMHC also offers The Newcomer's Guide to Canadian Housing on renting and owning, a comprehensive informative source on renting and owning property in Canada.

If you are new to the mortgage arena in Canada, or simply looking for better rates, investigate mortgage insurance. If you are additionally interested in insurance coverage that would also offer your family and mortgage financial protection in the event of your passing, investigate mortgage life insurance or term life insurance.

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