Are you about to purchase a condo or a house? This significant life decision likely comes with a multitude of questions.
- How can I get a pre-approval for a mortgage?
- Who should I hire for a pre-purchase inspection?
- How can I find the lowest mortgage rates?
During the hectic process of securing a mortgage, you may be offered mortgage insurance as an add-on to your loan. But what is the purpose of mortgage insurance? Is it wise to accept the proposal from your bank?
What is mortgage insurance?
Mortgage insurance may include life, illness, or disability insurance policies. It can help you make your mortgage payments or repay your loan if:
- You lose your job;
- You get injured, disabled or seriously ill;
- You pass away.
Two types of mortgage insurance
Mortgage life insurance
If you pass away, mortgage life insurance will pay off your mortgage. If your spouse or kids want to stay in the house but can't afford the payments, the mortgage will be paid off.
Disability insurance
This insurance covers your mortgage payments to your lender if you become injured, disabled, or seriously ill, and as a result, are unable to work.
In short, it serves to protect your family so they can keep the keys to your home rather than handing them over to the bank! Useful, isn't it? Indeed, it can be said that this insurance offers excellent protection for your spouse and children, especially if you haven't purchased a regular life insurance policy. In Canada, mortgage loan insurance is not mandatory.
While convenient, the exclusive mortgage insurance option provided by your financial institution may not offer the most competitive rates or comprehensive coverage. To ensure you're securing the best possible protection for your investment, it's advisable to explore alternative options from independent insurance providers. By comparing various plans, you can identify the policy that most closely aligns with your specific needs and budget.
DID YOU KNOW?
Mortgage insurance is not the same as CMHC insurance!
Indeed, mortgage insurance is optional and suitable for all types of mortgages. CMHC insurance, however, is mandatory for buyers who are unable to provide a down payment exceeding 20% of the property value. It's important to note that CMHC insurance does not protect your family in the event of your death.
Need help? Contact a Proprio Direct real estate broker today. He or she will be able to help you make all your plans a reality!
