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Posts tagged ‘Mortgage Insurance’

16
Jun

Mortgage Life Insurance

Is this coverage right for you?

Scrabble Mortgage

Mortgage Insurance

Another thing to take into consideration during your low mortgage rate shopping process is Mortgage Life Insurance, which is different than Mortgage Default Insurance.

What is Mortgage Insurance?

Mortgage Insurance is also referred to as mortgage life insurance and creditor insurance. In Canada, banks use post-claims underwriting for Mortgage Insurance. They only confirm that you qualify after you submit a claim.

Here are a couple of reasons why you ought to take a look at options aside from Mortgage Insurance:

  • Coverage decreases with time.
    • While your premiums remain the same throughout of your mortgage, the coverage you’re receiving is in fact decreasing with your Canadian mortgage rate balance.
  • Coverage is not eternal.
    • Your mortgage insurance will simply last as long as the “term” of your mortgage.
  • The lender is the beneficiary.
    • Assuming that your claim has been approved, the lender is the recipient and the money goes straight into their pockets.

What’s the Alternative?

Another choice is to purchase Term Life Insurance. With Term Life Insurance your coverage does not decrease with time, you’re approved in advance, and the money goes straight to you.

Term Life Insurance

The most common types of term life insurance for mortgage protection are 10-year, 20-year, and 30-year terms. These products charge consistent premiums for that time period. No medical examinations in the middle, no re-qualifying, and no surge in premiums.

Life Insurance Benefits

Individual term life insurance products are not tied to your mortgage.

Name Your Own Beneficiary

Plus, the majority of term life insurance policies in Canada have what’s referred to as a conversion privilege. This enables you to trade in your term life insurance policy for a permanent life insurance policy– without a medical examination.

Other advantages of life insurance consist of:

  • Discounts are offered based on your health and your family history.
  • Premiums are taxed at a much lower rate.
  • Versatile– you can switch mortgage lenders and take the coverage with you if you move or you can convert a term policy into a permanent policy.
  • Policy terms do not alter and in most cases the policy premiums are guaranteed.
  • If you’re shopping for mortgage insurance, you ought to consider life insurance as an alternative option.

Shop Around

Compare life insurance rates to the mortgage insurance rates provided by your bank.

Top It Up

Think about purchasing or topping up an individual life insurance policy to cover your best mortgage rate instead of utilizing mortgage insurance.

Speak with an Expert

Speak with a licensed insurance broker, not just your mortgage broker, to get insight on coverage.

23
May

Understanding Mortgage Insurance and CMHC

Do I really need mortgage insurance?

Scrabble Mortgage

Mortgage Insurance

A down payment serve as a form of security– so the larger your down payment, the better. If you have a greater amount of equity built up in your home, unforeseen circumstances may be more easily managed, and you’ll be less likely to default on your mortgage.

Lenders commonly group low mortgage rate shoppers that have a deposit between 5– 20 percent of the home purchase price into the “slightly higher risk” category. In order for the lender to protect against this increased risk, mortgage default insurance is required.

Best mortgage rate shoppers used to be able to secure 100 percent financing in Canada until October 2008 when the government stopped insuring zero down payment mortgages in an attempt to prevent a U.S. style housing crisis.

What is Mortgage Default Insurance?

Default Insurance, also referred to as mortgage loan insurance, offers protection to the mortgage lender. The lender generally requests this form of insurance for mortgage loans with a down payment of less than 20 %.

As of July 9, 2012, any Canadian mortgage rate requiring default insurance is capped at an amortization period of 25 years. This means 30-year mortgages are only a possibility for those placing more than 20 percent down known as a conventional mortgage.

In the event that you default on your mortgage, the lender will go through the process of collecting the outstanding amount on the loan. If the outstanding loan is still not completely paid off after selling the home, then the insurer will likely provide the difference back to the lender.

Where do I get Mortgage Default Insurance?

This type of insurance is supplied by the government organization Canadian Mortgage and Housing Corporation (CMHC), along with private insurers.

What Will it Cost Me?

When the lender insures the loan, they transfer the insurance premium to the homeowner. The premium is a percentage of the mortgage value based on your Loan-to-Value ratio (LTV). This premium may be paid in a single lump sum or it can be included in your monthly mortgage payments. To calculate your Loan-to-Value ratio, take the mortgage amount and divide it by the property value.

Advantages of Having Default Insurance

It is a win-win situation for both the lender and potential homeowner as the insurance protects the lender and the borrower. The lender is able to provide the same great mortgage products and rates to borrowers that are at a slightly higher risk of default.

Disadvantages of Having Default Insurance

Default Insurance helps make it possible for a homeowner to buy a property with a lower down payment– this indicates they have little value in their home and they will end up paying even more interest on the home loan. If the homeowner would like protection they will need to purchase additional mortgage insurance.

8
May

Mortgage Life Insurance

Is this coverage right for you?

Ask Your Mortgage BrokerAnother thing to take into consideration during your low mortgage rate shopping process is Mortgage Life Insurance, which is different than Mortgage Default Insurance.

What is Mortgage Insurance?

Mortgage Insurance is also referred to as mortgage life insurance and creditor insurance. In Canada, banks use post-claims underwriting for Mortgage Insurance. They only confirm that you qualify after you submit a claim.

Here are a couple of reasons why you ought to take a look at options aside from Mortgage Insurance:

  • Coverage decreases with time

While your premiums remain the same throughout of your mortgage, the coverage you’re receiving is in fact decreasing with your Canadian mortgage rate balance.

  • Coverage is not eternal

Your mortgage insurance will simply last as long as the “term” of your mortgage.

  • The lender is the beneficiary

Assuming that your claim has been approved, the lender is the recipient and the money goes straight into their pockets.

What’s the Alternative?

Another choice is to purchase Term Life Insurance. With Term Life Insurance your coverage does not decrease with time, you’re approved in advance, and the money goes straight to you.

Term Life Insurance

The most common types of term life insurance for mortgage protection are 10-year, 20-year, and 30-year terms. These products charge consistent premiums for that time period. No medical examinations in the middle, no re-qualifying, and no surge in premiums.

Life Insurance Benefits

Individual term life insurance products are not tied to your mortgage.

Name Your Own Beneficiary

Plus, the majority of term life insurance policies in Canada have what’s referred to as a conversion privilege. This enables you to trade in your term life insurance policy for a permanent life insurance policy– without a medical examination.

Other advantages of life insurance consist of:

  • Discounts are offered based on your health and your family history
  • Premiums are taxed at a much lower rate
  • Versatile– you can switch mortgage lenders and take the coverage with you if you move or you can convert a term policy into a permanent policy
  • Policy terms do not alter and in most cases the policy premiums are guaranteed

If you’re shopping for mortgage insurance, you ought to consider life insurance as an alternative option.

Shop Around

Compare life insurance rates to the mortgage insurance rates provided by your bank.

Top It Up

Think about purchasing or topping up an individual life insurance policy to cover your best mortgage rate instead of utilizing mortgage insurance.

Speak with an Expert

Speak with a licensed insurance broker, not just your mortgage broker, to get insight on coverage.

5
May

Mortgage Life Insurance

Is this coverage right for you?

Scrabble MortgageAnother thing to take into consideration during your low mortgage rate shopping process is Mortgage Life Insurance, which is different than Mortgage Default Insurance.

What is Mortgage Insurance?

Mortgage Insurance is also referred to as mortgage life insurance and creditor insurance. In Canada, banks use post-claims underwriting for Mortgage Insurance. They only confirm that you qualify after you submit a claim.

Here are a couple of reasons why you ought to take a look at options aside from Mortgage Insurance:

Coverage decreases with time.

While your premiums remain the same throughout of your mortgage, the coverage you’re receiving is in fact decreasing with your Canadian mortgage rate balance.

Coverage is not eternal.

Your mortgage insurance will simply last as long as the “term” of your mortgage.

The lender is the beneficiary.

Assuming that your claim has been approved, the lender is the recipient and the money goes straight into their pockets.

What’s the Alternative?

Another choice is to purchase Term Life Insurance. With Term Life Insurance your coverage does not decrease with time, you’re approved in advance, and the money goes straight to you.

Term Life Insurance

The most common types of term life insurance for mortgage protection are 10-year, 20-year, and 30-year terms. These products charge consistent premiums for that time period. No medical examinations in the middle, no re-qualifying, and no surge in premiums.

Life Insurance Benefits

Individual term life insurance products are not tied to your mortgage.

Name Your Own Beneficiary

Plus, the majority of term life insurance policies in Canada have what’s referred to as a conversion privilege. This enables you to trade in your term life insurance policy for a permanent life insurance policy– without a medical examination.

Other advantages of life insurance consist of:

Discounts are offered based on your health and your family history.

Premiums are taxed at a much lower rate.

Versatile– you can switch mortgage lenders and take the coverage with you if you move or you can convert a term policy into a permanent policy.

Policy terms do not alter and in most cases the policy premiums are guaranteed.

If you’re shopping for mortgage insurance, you ought to consider life insurance as an alternative option.

Shop Around

Compare life insurance rates to the mortgage insurance rates provided by your bank.

Top It Up

Think about purchasing or topping up an individual life insurance policy to cover your best mortgage rate instead of utilizing mortgage insurance.

Speak with an Expert

Speak with a licensed insurance broker, not just your mortgage broker, to get insight on coverage.