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Default Mortgage Insurance
When it’s required and how it works.
Default mortgage insurance is in place to cover the lender in case the borrower defaults on their payments. It is mandatory in Canada for any mortgage loan over 80% of the equity/value of the property. In some instances lenders will require this for mortgages of less than 80%. Default mortgage insurance is a cost to the borrower. Default Insurance Providers in Canada include:
- CMHC
- Genworth
- Canada Guarantee
Effective May 1st the following rate increase will come into affect for insured mortgages: Please see the linked news release from CMHC:
http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2014/2014-02-28-1100.cfm
Effective May 1st, CMHC Purchase (owner occupied 1 to 4 unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.
|
Loan-to-Value Ratio |
Standard Premium (Current) |
Standard Premium (Effective May 1st, 2014) |
|
Up to and including 65% |
0.60% |
0.60% |
|
Up to and including 75% |
0.75% |
0.75% |
|
Up to and including 80% |
1.25% |
1.25% |
|
Up to and including 85% |
1.8% |
1.80% |
|
Up to and including 90% |
2.40% |
2.40% |
|
Up to and including 95% |
3.60% |
3.15% |
|
90.01% to 95% – Non-Traditional Down Payment |
3.85% |
3.35% |
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