Should you buy mortgage insurance?

signing insurance documents

Most people are aware of CMHC mortgage loan insurance.

CMHC, or the Canadian Mortgage and Housing Corporation, will allow you to take out a loan on up to 95% of your home’s purchase price.  This means that instead of a 20% down payment, Canadians can buy a home with a minimum 5% down payment.  If this is the route you choose to take, the CMHC will have you apply for a mortgage loan insurance with the premiums added to your regular mortgage payments.

When you sit down with your mortgage agent, you will go through the insurance application process.  Based on your mortgage loan amount, your age, and your general health, you will sign up for an insurance policy to cover the balance of your loan should you die or become disabled while paying if off.  This provides protection to lenders, as their mortgage loan is guaranteed by the CMHC to be paid, and allows buyers access to a greater loan at lower financing rates.

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