Understanding the different types of insurances involved in getting a mortgage.

Some of the types of insurances are compulsory and others not.  Some of the insurance products that you need even sound the same. Our goals is to ensure that you get the right mortgage for you. That all starts by helping you understand what you need to know. Hopefully this quick article will help simplify and clarify the different insurances involved in the mortgage process:

Mortgage Insurance:

This is sometimes known as “CMHC” insurance.  There are in fact three mortgage insurance companies in Canada.  This type of insurance protects the lender when a borrower has less than a 20% down payment.  This insurance is added to your mortgage and is compulsory if your down payment is less than 20%.

Fire Insurance:

This insurance is compulsory and it is your solicitor’s duty to ensure that this insurance is in place when you close your mortgage.  Fire insurance covers you in the case where a fire destroys your home.  You can get this insurance from any provider.  It is normally bundled with your home & auto insurance and increases with the property value

Title Insurance:

Title Insurance is also compulsory and it is secured by your lawyer at closing.  This expense is incurred every time the property Title is affected.  Although it is compulsory, it is highly recommended since it protects the home owner against Title fraud amongst other things.

Mortgage Life Insurance:

This insurance is similar to life insurance and it is not compulsory.  Mortgage brokers have to offer it to borrowers as a protection against death and critical illness.  There are many similar protects in the market place that can be obtained from financial planners.  We highly recommend that all borrowers cover at least their mortgage balances by insurance

 

Let us know if we can help.  We would love to hear from you!