When looking to buy your first home, the size of your down payment will help determine which mortgage option is best suited for you.
For most Canadians, the hardest thing about buying a home – especially the first home – is saving the necessary down payment.
The two basic options are conventional mortgages, which require at least a 20% down payment and high ratio mortgages, which are designed for people who do not have the 20% down payment. This is called mortgage default insurance and is sometimes confused with creditor mortgage life insurance. Both are commonly referred to as mortgage insurance. Mortgage life insurance provides insurance protection on the mortgage in the event of death.
Mortgage default insurance provides the lender with the flexibility to offer you the same competitive interest rates available to homebuyers with a larger down payment. It’s insurance, which guarantees the mortgage by protecting the lender should the homeowner be unable to continue their payments for some unforeseen reason.
Mortgage insurance premiums are paid once, but can also be added to the principle of the mortgage.
There are currently two main mortgage insurance providers in Canada – Genworth Financial Canada and Canada Mortgage Housing Corporation, a government agency. Genworth Financial Canada, known as The Homeownership Company is the largest private insurer in Canada. They have helped over 1 million Canadians realize the dream of homeownership since 1995. And through product innovations such as the Homeowner Assistance program, they’ve also helped thousands of families stay in their home when faced with financial hardship that put their mortgage at risk.