10/08/2024
When you’re getting a mortgage, there are typically two types of insurances to know about:
Mortgage Default Insurance: This is required by the Canada Mortgage and Housing Corporation (CMHC) if you’re putting down less than 20% of the home’s purchase price. It protects the lender if you default on your mortgage payments, helping you buy a home with a smaller down payment.
Mortgage Protection Insurance: Offered by lenders (such as banks), this optional insurance covers your mortgage balance if something unexpected happens, like death. However, this only benefits the lender; in the case of a claim, the payout goes directly to the lender to cover the remaining mortgage, not to your family.
Consider an Alternative: Instead of mortgage protection insurance, a personal term life insurance policy equal to your mortgage balance might be a better option. This would pay your family directly, letting them decide how best to use the funds, whether for mortgage payments or other needs.
Conclusion: CMHC insurance is required with less than 20% down, but the extra mortgage protection insurance is optional—and may not be worth it if you can get personal life insurance instead.
💼 Want to know more? Reach out at +1 778-814-6758
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