The Role of Mortgage Default Insurance in Canada

The Role of Mortgage Default Insurance in Canada

When you’re purchasing a home in Canada, you may be required to obtain mortgage default insurance, also known as mortgage insurance. The insurance is designed to protect lenders in the event that a borrower defaults on their mortgage payments. In this blog post, we’ll explore the role of mortgage default insurance in Canada. 

What is Mortgage Default Insurance? 

It is an insurance policy that protects lenders in the event that a borrower defaults on their mortgage payments.  Homebuyers who make a down payment of less than 20% of the purchase price of the property, are required to have one. The insurance is paid for by the borrower and is typically added to the mortgage payments. 

How Does Mortgage Default Insurance Work? 

It is designed to protect lenders in the event that a borrower defaults on their mortgage payments. If a borrower is unable to make their mortgage payments, the lender can file a claim with the insurer to recover any losses. The insurer will then work with the borrower to try to find a solution to the problem, which may include modifying the mortgage terms or arranging a repayment plan. 

Who Provides Mortgage Default Insurance? 

In Canada, mortgage default insurance is provided by three insurers: the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial, and Canada Guaranty. These insurers are approved by the Canadian government and are regulated by the Office of the Superintendent of Financial Institutions (OSFI). 

What are the Benefits of Mortgage Default Insurance? 

Homebuyers benefit from it by purchasing a home with a smaller down payment. Without mortgage default insurance, most lenders require a down payment of at least 20% of the purchase price of the property. For many Canadians, coming up with such a large sum of money can be challenging. Homebuyers can make a down payment of as little as 5% and still qualify for a mortgage with the mortgage default insurance. 

Additionally, it helps to promote a stable and secure housing market by ensuring that lenders are protected in the event of a borrower default. This reduces the risk of financial instability and ensures that lenders are able to continue to provide mortgages to Canadians. 

Conclusion 

The mortgage insurance plays a critical role in the Canadian housing market. It enables homebuyers to purchase a home with a smaller down payment and ensures that lenders are protected in the event of a borrower default. If you’re considering purchasing a home in Canada and have questions about mortgage default insurance, speak with a mortgage professional who can provide guidance and advice. 

Contact Us Today

Contact Capital Mortgages today to learn more about refinancing and how we can help you save money on your mortgage. Our team of experienced mortgage professionals is here to help you navigate the process and to find the mortgage solution that best meets your needs. Whether you are looking to lower your monthly payments, pay off your mortgage faster, or access equity in your home, we can help you explore your options and find the best mortgage solution for your unique situation. So, if you are thinking about refinancing your mortgage in Canada, don’t hesitate to contact us today! 

 

We here at Capital Mortgages in Ottawa look forward to assisting you with all your Ottawa mortgage needs. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

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Mortgage Protection Insurance Capital Mortgage Brokers in Ottawa

The Importance of Mortgage Protection Insurance

The Importance of Mortgage Protection Insurance in an Economic Downturn

Mortgage protection insurance is a policy that helps protect your home and property if you are unable to make mortgage payments due to death, disability, or involuntary loss.

It’s important to have this insurance in place so that you can avoid foreclosure on your home when unforeseen events happen. This insurance may be a wise investment for those who are looking for additional financial security in the event of an economic downturn. To get started, find out if your lender offers this type of mortgage protection insurance, and speak with them about what might be included in the policy.

What is mortgage protection insurance?

Mortgage protection insurance is a type of insurance that helps protect your home and property if you are unable to make mortgage payments due to death, disability, or involuntary loss. This insurance may be a wise investment as it provides additional financial security in the event of an economic downturn.

Who needs mortgage protection insurance?

Mortgage protection insurance is an important investment for those who are looking for additional financial security for themselves and their families. This type of insurance provides you with the ability to make sure that your mortgage is still being paid if the unthinkable happens and you or someone in your family becomes disabled, dies, or has an involuntary loss. It can be a wise investment for those who are concerned about an economic downturn and want to make sure they’re protected in the event of foreclosure on their home.

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How does it work?

Mortgage protection insurance is a policy that offers a degree of financial protection to your home and property if you are unable to make mortgage payments due to death, disability, or involuntary loss.

How does this insurance help in an economic downturn?

Mortgage protection insurance is a type of policy that helps protect your home and property if you are unable to make mortgage payments due to death, disability, or involuntary loss. The  insurance will help you avoid foreclosure on your home.

In an economic downturn, such as the 2008 recession, people are no longer able to afford their homes. So if they have this insurance then they have a better chance of keeping their home during an economic downturn in the housing market.

Furthermore, the mortgage protection insurance is a great investment for those who are looking for additional financial security in the event of an economic downturn.

Conclusion

Protect your mortgage by adding this insurance to your home insurance. Insurance is a cost and it is worth it to ensure that if something were to happen to your home, you would still be able to afford the monthly mortgage payments. When the housing market crashed in 2008, those who purchased protection insurance were still able to make their payments.

We here at Capital Mortgages look forward to assisting you with Ottawa mortgage needs and approvals. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

You can use these links to APPLY NOW or CONTACT US.

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Mortgage Insurance

Why You Need Mortgage Insurance -Lender

Why You Need Mortgage Insurance

Buying a home is one of the most important decisions you’ll ever make. That’s why it’s so important to get it right. Whether you’re a first-time homebuyer or not, there are plenty of things to think about when you’re getting ready to purchase your dream house. One thing that often gets overlooked is mortgage insurance. A lot of people don’t know much about what it is, but here are some things you need to know about it before deciding whether or not to add it to your loan.

What is mortgage insurance?

Mortgage insurance is a type of insurance that protects the lender, not the borrower. It’s designed to protect the lender if the borrower defaults on their mortgage by providing funds to make sure they get paid back. In most cases, it only protects you if your down payment is less than 20 percent of the home price or less.

How does it work?

Mortgage insurance protects you if you’re unable to make your house payments. In the event that you become unemployed, or your income and expenses change, and you aren’t able to keep up with your mortgage repayments, it’s possible that the bank can take over your home.

Why should you have it?

Mortgage insurance is a way to protect the lender from a loan default. If you were to default on your home loan, the lender would need to cover the difference between what you owe and what your house is worth. Without it, lenders could be out of pocket for large sums of money. But with it, they are protected against this risk.

If you’re buying a home with someone else, you’ll need mortgage insurance. When two people buy a house together and only one person has good credit, then both parties will need mortgage insurance because one party can’t guarantee the other’s debt. It also protects against fluctuations in interest rates or in property values that may cause your monthly payments to rise or fall by more than 10 percent in five years’ time.

How much will it cost?

Mortgage insurance is a lot like life insurance, with the exception that it’s designed for your home. You can’t see it or feel it, but it  protects you from being in debt should your home be lost to a disaster such as fire or flood.

Mortgage insurance premiums are usually around 0.5% of the loan value, meaning if you’re borrowing $200,000 on a 30-year mortgage, then you’ll pay about $1,000 per year in mortgage insurance premiums.

Conclusion

You’ve found the perfect home and you finally got approved to buy it. Congratulations! Now you’ll want to make sure you have the right type of mortgage insurance to protect you in the event that something happens to your home.

Take a look at the six reasons why you need mortgage insurance here and make sure you ask about it when applying for your loan. It will be one less thing to worry about!

We here at Capital Mortgages look forward to assisting you with Ottawa mortgage needs and approvals. Contact us today by calling us at: 613-228-3888 or email us direct at: info@capitalmortgages.com

You can use these links to APPLY NOW or CONTACT US.

You can also click here.