Mortgage insurance is a kind of insurance that was developed to compensate financial institutions or investors should a homeowner default on their loan. It is required for any mortgage where the downpayment is less than 20%. Whether the mortgage insurance is public or private will depend on the institution that lends the funds.
Where Can I Buy Mortgage Insurance
Throughout Canada, there are three companies that sell mortgage insurance, Canada Mortgage and Housing Corporation (also knowns as CMHC), Genworth Financial Canada, and Canada Guaranty Mortgage Insurance Company.
The Canada Mortgage and Housing Corporation
In order to purchase mortgage insurance from the Canada Mortgage and Housing Insurance, the approved lender has to be on the companies approved list, which include Alterna Savings and Credit Union, Bank of Montreal, TD Canada Trust Company and the Bank of Nova Scotia. The Canada Mortgage and Housing Corporation also require that the property being purchased is situated within the country and that the buyer put down a minimum of 5 or 10 percent – the exact amount depending on whether it is a single or multi-family property.
Genworth Financial Canada
In addition to home buyers, Genworth Financial Canada provides financial services to retailers, lenders, mortgage brokers and builders. Assistance is offered through various programs including, the Energy Efficient Housing Program, which is designed to help people who buy an energy efficient home, or who refinance by making energy-efficient improvements. Genworth Financial Canda offers savings up to 10 percent refunds on premiums. Another program that Genworth Financial Canada offers is insurance policies on mortgage loans with an amortization loan up to thirty years.
The purpose of this loan can be any of the following debt consolidations, repay existing financing, or renovations. Portable mortgage default insurance is also offered and should only be used to either purchase or refinance a home. The majority of financial institutions give the option of portable mortgage default insurance which allows borrows to transfer their already existing mortgage loan to a different property, saving the cost of setting up another mortgage loan and preserving the already existing low-interest rate.
The third company that provides mortgage insurance is The Canada Guaranty Mortgage Insurance Company, which provides an array of mortgage insurance policies, such as Purchase Advantage Plus, Refinance Advantage, Downpayment Advantage, and Lifestyle Advantage.
Although each of the three providers of mortgage insurance offers different programs, in general, it is important for homeowners to understand that they have the options of either paying the insurance premium in cash or adding it to the mortgage loan amount. However, if choosing to go with the second option, it should be noted that interest is added to that as well as the loan itself, increasing the overall cost.
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