Insurance Types: Mini Series Part 1
Updated: Apr 6, 2022
𝐃𝐞𝐟𝐚𝐮𝐥𝐭 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞
Also referred to as Loan insurance.
Any mortgage in Canada that has less then 20% for down payment has Default Mortgage Insurance. This protects the lender should you default on your mortgage payment.
𝐁𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐭𝐨 𝐘𝐎𝐔:
This helps individuals to purchase a property up to 95% of the purchase value.
𝐃𝐨𝐰𝐧 𝐏𝐚𝐲𝐦𝐞𝐧𝐭 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭𝐬:
To get mortgage default insurance, you’ll need a minimum down payment. The amount depends on the home’s purchase price:
If the home costs $500,000 or less, you’ll need a minimum down payment of 5%.
If the home costs more than $500,000, you’ll need a minimum of 5% down on the first $500,000 and 10% on the remainder.
Over 1,000,000 connect for the correct info.
𝐂𝐨𝐬𝐭:
✅ Your lender pays an insurance premium on #mortgage default #insurance. It’s calculated as a percentage of the mortgage and is based on the size of your down payment. Your lender will likely pass this cost on to you. Generally, it is added to your mortgage and include it in your payments.
✅ You will also pay Provincial tax on the premium, in Quebec, Ontario & Saskatchewan. This amount cannot be added to the mortgage loan amount.
𝐂𝐡𝐚𝐫𝐭 𝐛𝐞𝐥𝐨𝐰 𝐟𝐫𝐨𝐦 𝐂𝐌𝐇𝐂 𝐰𝐞𝐛𝐬𝐢𝐭𝐞.
Loan to Value Up to & including 95%
4.00% Premium on Total Loan
Loan to Value Up to & including 90%
3.10% Premium on Total Loan
Loan to Value Up to & including 85%
2.80% Premium on Total Loan
Loan to Value Up to & including 80%
2.40% Premium on Total Loan
For more info on Default Mortgage insurance, connect with me today. Other premiums may apply depending on lender and type of mortgage product. Portability on Premiums may also apply.
CMHC reference on Loan Insurance
CMHC FAQ on Loan Insurance