Mortgage insurance is insurance that protects the lender in the event of borrower default. This coverage is required for high ratio mortgages exceeding 80% of value. To avoid paying mortgage insurance, buyers must be able to pay at least 20% of the purchase price.
Three organizations currently offer mortgage insurance to approved lenders: Genworth Financial Canada, AIG United Guaranty Canada and Canada Mortgage and Housing Corporation. The mortgage insurance fee, a percentage of the mortgage amount, varies according to a graduated scale based on loan-to-value ratio: the higher the loan-to-value ratio, the higher the premium. Mortgage insurance is due on closing and can be paid either separately or added to the mortgage.
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Keith Marshall is a real estate agent with Prudential Grand Valley Realty, serving Kitchener, Waterloo and Cambridge. If you’re thinking of buying or selling your home, please give me a call. I aim to take the stress and mystery out of the home buying and selling process.