Types of insurance with your mortgage

The mortgage process can be confusing to say the least.

Most of the time our attention is focused on the rate and terms but there are many pieces to the mortgage and the types of insurance are something that deserve a minute of your time for sure.

Mortgage default insurance – mortgage default insurance is usually, though not always, for those who have less than 20% to put down on a new home.

This insurance is for the benefit of the mortgage lender. If you default on your mortgage, the lender has insurance that this third party will cover any losses the lender then incurs.

There are three insurance providers in Canada; CMHC, Genworth and Canada Guarantee. They all serve the same purpose. You pay them a set percentage of the mortgage amount.

• 95% (or 5% down) 3.60%

• 90% – 95% 3.15%

• 85% – 90% 2.40%

• 80% – 85% 1.80%

(Please note that these rates can be very different for those who are self-employed, purchasing a second home or those purchasing a vacation home so please check with your mortgage professional).

The mortgage default premium is added to your mortgage so don’t worry that you will have to provide a cheque up front.

Title insurance – title insurance is becoming increasingly more common these days. Lenders may require it and if so the cost is about $249 plus GST and will be collected at your lawyer’s office.

Title insurance protects the lender in case your home is not compliant with the municipal zoning. Say for example that a garage was built which actually is two feet into the neighbour’s lot.

If the neighbour and the city will not agree to an easement which would allow for this, then the title insurance policy kicks in and they will do what has to be done to make things compliant.

For a small additional fee you can upgrade to a complete title insurance policy and be protected from things like identity theft, mortgage fraud or if the home had renovations done which were not up to code.

Home insurance – if you have a mortgage then you are legally obligated to have home insurance in case of fire or the myriad of other things a good home insurance policy covers. You will be required to provide proof of the coverage to the lawyer before the mortgage funds.

Life/disability insurance – your mortgage is likely your biggest debt and it’s so important to ensure that your people are protected in case the worse happens. You will be offered a policy by your mortgage professional during the process. There is no legal obligation to accept so don’t let them convince you otherwise. BUT, you really owe it to yourself to ensure you have sufficient coverage.

Disability is the number one reason for mortgage default in Canada so please for the love of Pete take the time to review your coverage.

There you have it. The four types of insurance your mortgage professional will need to tell you about. As always dealing with a qualified professional is the best way to navigate the tricky world of mortgage. Take care!

Pam Pikkert is a mortgage broker with Dominion Lending Centres – Regional Mortgage Group I Red Deer.

Just Posted

Ronnie Dixie gets another chance at life from a liver transplant

Red Deerians invited to annual Stroll for Liver charity walk June 3rd

Trial for man accused of 2006 Eckville murder “unreasonably delayed”

Lacombe’s Shayne Gulka is awaiting trial for the 2006 murder of Bradley Webber

Individuals face 84 criminal charges related to stolen, counterfeit credit cards

Investigation and search warrant executed collaboratively by Red Deer and Sylvan Lake RCMP

Red Deer’s Stephanie Essensa back in the ring May 26th

Essensa joins Dekada lineup in Calgary

Norman Wiebe has registered as a nominee for the UCP in Red Deer South

Hospital and courthouse among pressing concerns to Wiebe

3 survivors after airliner with 110 aboard crashes in Cuba

It was Cuba’s worst aviation disaster in three decades and its third major air accident since 2010

Maskwacis and feds sign historic education agreement

The Maskwacis Education School Commission signed an agreement setting the stage for their education

Plane with 104 on board crashes on takeoff in Cuba

Boeing 737 operated by state airline Cubana crashed on takeoff from Jose Marti International Airport

UPDATED: Gunman opens fire in Texas high school, killing up to 10

Santa Fe High School which went on lockdown around 8 a.m. Friday

Coroner speaks about mix-up of Humboldt Broncos crash victims, release of name

A coroner involved says it wasn’t until an injured player woke up in hospital and said he was a different person that officials realized the mistake

‘Nowhere near close:’ U.S. rebuffs Trudeau hope for quick NAFTA deal

The United States declared the NAFTA countries were nowhere close to a deal in a statement Thursday

Prices at the pump spike as long weekend brings out Canadian drivers

Motorists in many parts of Canada are expected to see rising gasoline prices as they fire up their vehicles for road adventures on the Victoria Day long weekend.

Humboldt Broncos resolve trademark issue with junior hockey league

The Humboldt Broncos hockey club says they will have a team ready to hit the ice for the 2018-19 season.

Most Read