CTV Morning Live: Mortgage Minute September 25, 2018

Any mortgage with less than 20% down payment is required to obtain mortgage default insurance through one of the 3 insurers in Canada: CMHC, Genworth, or Canada Guaranty. The lender will choose which insurer and it makes no difference to the clients. This included in the mortgage and the only out of pocket expense to the customers is the PST on the insurance. The maximum purchase price eligible for this insurance is $1 million.

This insurance protects the lender in the case that the clients default on their mortgage payments. The benefit to the clients is that they are eligible to purchase a home with as little as 5% down payment. Premiums are calculated base on how much down payment is available, less down payment means a higher rate for the insurance as there is more risk.

Having a down payment of less than 20% will need to use the qualifying rate when applying for the mortgage which is currently 5.34%.

If a borrow defaults on their mortgage, all 3 insurers have programs in place to try and assist. The first step is to contact the lender to try and work through and if they are not willing to work with the borrow, then contact the insurer for assistance and to work to put a plan in place.

For more information on default insurance visit our information centre here and contact your Mortgage Broker.

To watch the CTV Morning Live clip, click here.