Mortgage Default Insurance
Mortgage default insurance is very different from mortgage protection insurance. Mortgage default insurance (also referred to as CMHC insurance), is mandatory in Canada for homeowners whose down payment is less than 20% of the purchase price.
Mortgage default insurance protects lenders in the event a borrower stops making payments and defaults on their mortgage loan.
What is it? Do I really need it? Is there a better option than buying mortgage insurance through my mortgage broker or the bank?
Mortgage protection insurance provides highly valuable coverage when you are concerned that an unexpected death or illness could leave your loved ones with a large mortgage that they are unable to pay. Mortgage protection insurance protects them by paying off the outstanding principal balance of your mortgage. As such, it is essentially a type of “life” insurance.
Want the Very Best Value?
Consider why the traditional mortgage insurance is the superior option here.
Traditional Mortgage Insurance
- Protects you and your family
- Coverage amount stays the same for duration of term
- Discounts if you are healthy; rates based on your own health
- You control your policy, including who is the beneficiary
- You own your policy; only you can cancel the policy
- Your loved ones can use the benefits for other purposes besides covering the mortgage
- Fully transferable
- Premiums fully guaranteed
- Insured even if mortgage is in default
- Automatically renewable
- Your insurance is portable to another property
- Automatically renewable up to age 75
- Fully convertible to permanent coverage
Bank / Lender Mortgage Insurance
- Protects the lender
- Coverage amount declines based on mortgage balance
- No discounts for healthy people; older you are the higher the premiums
- Little or no control of pooled policy
- Bank owns your policy; they can cancel when they want
- Bank uses money to pay off mortgage
- Premiums not guaranteed
- Policy voided if mortgage in default
- Policy may be cancelled at renewal time
- Lapses if property is sold
- Most bank plans expire at age 70 or earlier
- Not guaranteed at renewal
Get a quote today. Get peace of mind today.
A Park Insurance Partner