This type of insurance protects creditors in the event that debtors are no longer able to repay their mortgage. This type of insurance is available for mortgages down 1 million. The maximum duration of depreciation is 25 years.
This insurance increases your purchasing power
Although this insurance costs money, it provides you with a huge profit. The risk of insolvency would be much greater if you do not have this insurance and therefore the interest would be higher. By having this insurance, creditors can lend you money because of the protection offered by insurance. For you, getting a lower interest rate allows you to borrow more money. As a result, your purchasing power increases and you get more in return for every dollar invested.
Which companies offer these insurance?
Many creditors offer this type of insurance. Among the most popular, we find:
- Genworth Finacial
- Canada Mortgage and Housing Corporation
- Canada guaranty mortgage insurance company
Debtors may also appeal to creditors if such insurance is necessary.
When is mortgage insurance not required?
Debtors who can make a first deposit of 20% of the total value of the loan are not obliged to purchase this insurance. When that happens, buyers simply take a normal mortgage. Of course, there are exceptions to this situation. If the debtor’s salary begins to vary greatly, such insurance may be required.
What are the premiums for mortgage loan insurance?
The monetary supplement will be calculated based on the first deposit. Buyers making a large first deposit can expect to pay less. In most cases, extra payments vary between 0.5-3% of the total amount borrowed.
How is mortgage loan insurance paid?
This insurance is often financed by the creditor. It’s not like lawyers fees or taxes on property. Buyers do not need to pay the amount right away at the purchase. The value of the insurance is added to the value of the house. As a result, monthly payments will increase based on the price of insurance.
Why is this insurance so important?
The majority of creditors limit the loan to 80% of the total value of the house. If a buyer is not qualified for insurance, he will have to apply for a second loan from another creditor to make up the difference. The disadvantage with this second loan is the high interest rates. Also, this equates to much larger monthly payments. Second loans are more expensive than the first ones. This is especially true when the amount of money borrowed is greater than 75% of the value of the property.