Vancouver Real Estate Knowledge base and Information Update
Published on Nov 18, 2014 by CREA
Mortgage default insurance is a protection for lenders who grant mortgages to buyers with less than a 20 per cent down payment.
Mortgage default insurance does not protect you like home or life insurance. You are paying for it to protect the lender in case you are unable to make your mortgage payments.
Mortgage default insurance enables you to purchase a home with a minimum down payment of 5%.
Mortgage default insurance generally costs between 0.6% to 3.35% of the purchase price of the home. It is typically added to your mortgage which means you pay a little of it off with each payment. Over the life of your mortgage, the cost can add up.
Buying a home may be one of the biggest financial decisions you’ll ever make. That’s why financial literacy is so important and why I’m pleased that November is Financial Literacy Month. When you have the financial knowledge you need, you are better able to make informed choices and contribute to a prosperous Canadian economy.
For more information on the financial aspects of the home buying process check out the Homebuyers’ Road Map, a collaboration between The Canadian Real Estate Association and the Financial Consumer Agency of Canada.