Insurance on Mortgages - Make sure you are covered
Updated: Apr 27, 2020
Recent conversations around insurance on mortgages. A brief explanation below to help you with insurance questions.
There are three types of insurances that are associated with mortgages.
1. Default Insurance - this is typically put in place to insure the lender is protected should you default on your mortgage payments and to help you set a plan in place to help you navigate through a difficult time should you need their assistance. We have three default insurers, CMHC, Genworth and Canada Guaranty. On a high ratio mortgage, default insurance is added to the mortgage as part of you total mortgage amount and is amortized into your payment.
2. Mortgage Protection Insurance - There are two components to this type of insurance, Life and Disability. Life pays your mortgage balance to the lender should something happen to you. Disability will help pay the mortgage and property tax payment for a specified time if you are insured.
Things to consider; the possibilities of porting the insurance to another lender or increasing the amount if you were to purchase a more expensive home.
Review the information on this policy carefully, not all mortgage protection insurance are equal. Be sure to get the information from a mortgage insurance company for any clarification. We can provide you will a contact to answer all your questions.
3. Property or Fire Insurance - this insurance is required to protect you, the home owner in case there is a fire, damage ect to your home and property. You can obtain this insurance through a home and auto insurance company. Look at bundling if available with them. Your mortgage must have this insurance in place at all times. Check with your provided for details. They will need your mortgage reference number, your mortgage lender and their address.