When you buy something, you want to make sure that if something terrible happens to it, you are protected financially. When you buy a car, you need auto insurance, and just like that when you buy a mortgage, you need mortgage insurance.
There are two types of mortgage insurance available one that protects the lender and one that protects you. The first type of insurance is offered through the Canada Mortgage and Housing Corporation or Genworth Financial. If you have less than a twenty per cent down payment the insurance provider will reimburse the lender should you default on the mortgage. This is a law that is set at the federal level and applies to all mortgages. You enjoy the benefit of this facility at the cost of a mortgage insurance premium that you either pay in one lump sum when you enter the mortgage, or it is blended into the monthly installment on your mortgage.
The second type of mortgage insurance is to cover you should you be unable to pay your mortgage due to death or health issues. If you should die and have the insurance your balance outstanding is paid in full. This is one of the more popular types of insurance, and your mortgage broker can advise you on the proper channels to acquire it. A different kind of the insurance that is gaining steam is the one that will help offset your monthly payments should you become disabled due to illness or you lose your job through no negligence of your own.
These types of mortgage insurance are available through both an insurance broker and your mortgage broker. All lenders must allow you the option of using the insurance, and you must sign a disclaimer that you are aware of your opportunity to have this type of protection. The most common type of mortgage insurance is offered through brokers and is called the “MPP” Mortgage Protector Plan. You will pay a monthly premium for these facilities, but if you ever need the benefit, you will be happy you signed up for them when you did.
When looking for an insurance shop around since the premium you pay will vary greatly on your current medical conditions and any lifestyle choices that may put you at greater risk such as smoking, heart disease. Make sure that you fully understand what the insurance entails and that you are fully aware of what conditions it does cover. No mortgage insurance covers all diseases so you will need to investigate to find out what protection you are buying.