MORTGAGE DEFAULT INSURANCE

What is default mortgage insurance?

Mortgage default insurance helps buyers purchase a home and begin building equity sooner for those who put less than 20% downpayment and where the purchase price is less than $1,000,000 and up to maximum amortization of 25 years.

For anything greater than 20% downpayment, purchase price less than $1,000,000 and up to a max amortization of 25 years, most lenders will cover the cost of the insurance.

Mortgage default insurance protects lenders in the event a borrower defaults on their mortgage. It does not protect the borrower or a guarantor. If a borrower defaults, the insurer may oversee all legal proceedings and foreclosure of the property. In addition, the insurer compensates the lender should there be a shortfall after the property has been sold and expenses paid. The defaulting borrower remains responsible for any shortfall on the mortgage and the lender or mortgage insurer may pursue the borrower for any deficiency following a sale of the property.  

Canada's approved default insurance providers are:

• Canada Mortgage Housing Corporation (CMHC)
• Sagen
• Canada Guaranty (CG)

Who pays the insurance premiums?

• It is paid by the borrower(s) added to their mortgage loan amount and repaid over the scheduled amortization period. The premiums may be factored in as part of the qualifications for the mortgage should you put less than a 20% downpayment.

How are the premiums calculated?

You may refer to the insurer's website for updated premium rate costs. 

Click on the link below:

• CMHC 
• Sagen
• Canada Guaranty

What if the purchase price or value is over $1,000,000?

• The property and mortgage would not be eligible for insurance, however, there are other options available. 
• A minimum requirement of 20% downpayment 
• Up to a maximum 30 year amortization scheduled repayment options 
• Interest rates may vary between lenders as these mortgages are considered high risk since they're not protected by the insurer.

*The information above is subject to change without notice*

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