Mortgage Default Insurance

March 2020 – Mortgage Default Insurance protects the bank only, not you. Normally banks can only lend up to 80% of the purchase price of a home or its appraised value. If you are putting down less than 20% and otherwise meet the bank’s regular lending qualifications you may be able to qualify to buy mortgage default insurance from an insurer like CMHC (required to compensate your bank if you default on your mortgage) It does not protect you or your interest in your home nor does it cover your mortgage payment if you are unable to pay it, or if you pass away. The bigger your down payment, (and other factors) determines how much your insurance premium will be. You can either pay this up front, or add it to your mortgage and pay it (with interest) over time. It can however allow you to buy a home sooner with a down payment as low as 5%. Be sure to get professional advice to understand what makes sense for your specific situation. Owning a home is not always your best option. Disability insurance helps you if can’t make your mortgage payments due to illness/injury. Personal life insurance helps your family repay your debts if you pass away and offers greater flexibility and benefits than insurance that your bank will offer you to protect themselves (not your family)