Mortgage default insurance, which is commonly referred to as CMHC insurance, is mandatory in Canada for down payments between 5% (the minimum in Canada) and 19.99%. Mortgage default insurance protects lenders, in the event a borrower ever stopped making payments and defaulted on their mortgage loan.
Although mortgage default insurance costs homebuyers 2.80% - 4.00%1 of their mortgage amount, it does allow Canadians, who might not otherwise be able to purchase homes, access to the Canadian real estate market. Without it, mortgage rates would be higher, as the risk of default would increase. Lenders are able to offer lower mortgage rates when mortgages are protected by mortgage default insurance, because the risk of default is passed along to the mortgage insurer.
There are some requirements you have to meet in order to qualify for mortgage default insurance:
Oliver Reprich is the broker of record of Bracebridge Realty brokerage, based in Bracebridge which is the Heart of Muskoka.
Our area of expertise are waterfront properties and cottages in Muskoka, Parry Sound and Haliburton