Default Insurance (CMHC, Genworth or Canada Guaranty)

What is Mortgage Default Insurance?

When you purchase a home with less than 20% down your mortgage must be insured by one of three insurance companies (CMHC,  Sagen (formerly Genworth) or Canada Guaranty). ​The cost of the insurance and the lending guidelines are generally the same between all three companies, with the difference being that CMHC is a publically owned corporation while Sagen (formerly Genworth) and Canada Guaranty are private corporations. In certain circumstances, mortgage default insurance can sometimes be required for mortgages with a down payment larger than 20%, but this is not the norm. 

The purpose of mortgage default insurance is to protect the mortgage lender from any losses should there ever be a foreclosure. You (the borrower) pay the insurance premium (it is added to the total amount of your mortgage so you don't have to pay for it out-of-pocket) but the insurance protects the lending institution in the event of a foreclosure.

Here is a link to CMHC's website explaining the cost of their insurance (the insurance is required if you put less than 20% down).

The insurer always has the final say on a file; so, even once you have been pre-approved by a lending institution, the insurer will not review your file and will not receive a copy of your information until there is an offer in place on the home as the insurers do not review pre-approvals. I work hard and do my very best to anticipate the decision of the insurer ahead of time by attempting to verify your information at the time of pre-approval as well as insuring that you qualify using the insurers' current lending guidelines. The purpose of a pre-approval is to attempt to identify and mitigate most issues ahead of time to avoid any surprise decisions by the insurer after you've written an offer on a home.

Please contact me for more information on mortgage default insurance!