Mortgage Default Insurance

Are you planning to purchase a property with less than 20% down payment?

If yes, you require mortgage default insurance which generally adds 0.5% to 3% to the cost of the amount of the mortgage depending on the total amount borrowed.

Mortgage default insurance enables you to purchase a home with a minimum don payment of 5% (10% for multi-unit dew lings) with interest rates comparable to those of a conventional mortgage.

Major providers of mortgage default insurance include Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada, and Canada Guaranty Mortgage Insurance Company.

When you buy a home with less than 20% down payment, the mortgage needs to be insured against default. This type of insurance protects the mortgage lender in case you are not able to make your mortgage payments. It does not protect you.

Courtesy of "Home Buyers Road Map" - Financial Consumer Agency of Canada