Mortgage default insurance might come at a cost, however, it enables ownership and comes with many benefits.

Mortgage default insurance is actually to the benefit of your mortgage lender. Furthermore, it is actually an expense that you are responsible for.

If you are looking to purchase your home with a downpayment between 5% and 19.99%, you must purchase mortgage default insurance.  The three providers of default insurance are:

  • The Canadian Mortgage & Housing Corporation (CMHC).
  • Genworth Financial
  • Canada Guarantee

A default insured mortgage enables Canadians access to real estate ownership who cannot come up with a 20% or greater down payment.

In addition, mortgage rates for insured mortgages are typically lower than conventional mortgage rates.

Insured mortgages are deemed to be less risky as the insurer essentially assumes the risk of mortgage default.

In most cases, you’ll be responsible to pay the insurance premium.

Also, keep in mind that HST is payable on the default premium and due at closing. Whereas the premium can be capitalized to the principal balance of the mortgage.

Your mortgage lender may deem your mortgage to be insurable (not insured). In other words, a mortgage that ‘fits’ the default insurers rules, however the lender insures the mortgage at their expense.

This is different than title insurance. Title insurance is also a cost that you must assume. With mortgage financing, a lenders policy protects the lender from losses in certain situations and covers the mortgage amount.

If you have any questions about mortgage default insurance, contact us at anytime.

-DV Capital Corporation 13186
T: 416-839-5874
TF: 1-866-839-5874

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