Mortgage Insurance

Understanding Property Mortgage Insurance

Owning a home is a dream for many, but it comes with added responsibilities. A mortgage to be paid for the next 25-30 years might sound easy, but it isn’t. The circumstances aren’t always the same, and you must think about the situations that might arise when you are not around.

Property mortgage insurance is a great way to secure borrowers and lenders against financial loss.

So, what is it?

Home loan mortgage insurance allows buyers to secure a home with a smaller down payment, often less than 20% of the property price. It is typically required for high-ratio mortgages (where the down payment is below 20%). The borrower pays a premium, either upfront or rolled into monthly payments. It mellows lenders into offering the money and opens the doors for homeowners to get a home without worrying about tomorrow.

A private mortgage insurance is an added payment that the borrower must pay in addition to the mortgage payment. It is a security for the lender to secure the loan in case the borrower defaults on the mortgage payments. It is typically bought in cases where the down payment is less than 20% of the property price.

So, the bank is the lender, the property owner is the buyer, and the insurance company is the service provider.

As a buyer, you can pay the premium monthly or pay the cost upfront.

The policy differs from the traditional life insurance in many ways. In traditional life insurance, the beneficiaries get the entire payout in case the insured dies. However, if you have PMI, the insurer will pay the remaining mortgage balance in the event of the death. Say, you paid mortgage payments on your house property for 20 years, and then the unfortunate incident happens. Say, the remaining balance in your mortgage is CAD 20000. The insurer will directly pay this amount, and there will be no payout for the insurer’s family.

Types of Mortgage Insurance Plans

Check out the different types of mortgage insurance:

Private Mortgage Insurance

Government-Backed Mortgage Insurance

In Abbotsford, British Columbia, Canada, the ruling government agency is the Canada Mortgage and Housing Corporation. It plays a significant role in a country's housing market by ensuring that both lenders and borrowers have security, contributing to home accessibility to more and more people.

CMHC contributes in multiple ways, which are discussed below:

Mortgage Default Insurance: As discussed earlier, this insurance type aims to protect lenders from financial loss.

Affordable Housing Initiatives: The agency offers help to the needy to get a roof over their heads, especially senior citizens, low-income families, and other vulnerable groups.

Mortgage Financing: Mortgage financing is another service CMHC offers builders and property owners of financial multi-residential complexes.

In short, CMHC is more inclined toward helping lenders and property owners.

Mortgage Life Insurance Protection

You would be interested in this if you are a homeowner and have a mortgage to pay.

This insurance type pays the outstanding balance on the mortgage in the event of the borrower’s death. It ensures your family is protected and not burdened by financial responsibilities in difficult times.

Anyone can get a mortgage life insurance protection plan. The age and health of the borrower play a crucial role in deciding the premium cost. As the mortgage amount decreases with every payment made, the coverage amount also decreases.

With such property mortgage insurance, you can live your life in peace.

Intrigued by the benefits? Get Mortgage Insurance Quotes Now!

Mortgage Insurance Cost and Coverage

The mortgage insurance cost depends on the type of insurance you plan to buy, age, health, and mortgage down payment.

The cost typically ranges between 2.8%-4.0% of the property price. So, if you buy a property worth CAD 700000 in Canada, the home loan mortgage insurance will cost you around $ 18,000 CAD-$28,000 CAD.

The mortgage insurance monthly cost can be rolled into mortgage payments.

For mortgage insurance quotes, contact Insure Affordable now!

Benefits of Property Mortgage Insurance

Here’s why you must visit Insure Affordable today and buy a home loan mortgage insurance:

Mishaps can knock on your doorstep anytime; thus, you must be prepared. If you have a mortgage, you must buy insurance so your family is unburdened by the financial responsibilities when you are no longer around.

The financial burden on the surviving is relieved as the insurance pays the outstanding mortgage balance.

Financial Protection for Family Members

Tax-Free Payouts

You must know that the mortgage insurance payouts are tax-free, so the surviving family members don’t need to pay taxes on the death benefit amount.

Flexibility and Portability

Some policies are portable in case you want to refinance the mortgage. Also, if you want to convert your mortgage insurance into another life insurance type, you can do so.

Mortgage payments are a constant source of worry, especially when the times are difficult. In such times, mortgage life insurance offers much-needed peace of mind.

Peace of Mind

Affordability

Compared to the hefty mortgage amount and the consequences of not paying them, the mortgage premium is a very affordable way of securing your tomorrow.

For best insurance-related assistance in Abbotsford, Surrey, Richmond and surrounding areas, contact only Insure Affordable!

Secure Your Future With Right Mortgage Insurance!

If you're considering home loan mortgage insurance in Abbotsford, BC, comparing options and getting the best mortgage insurance quotes is essential. Investing in mortgage insurance protection plans can provide long-term financial security, whether you're buying a home in Surrey, Langley, or Mission.

So, visit us at Insure Affordable today and help you get the best mortgage insurance quotes. We are the most trusted insurance agency in Abbotsford, BC.

Contact us today for more information!

Frequently Asked Questions

Que: What is the average cost of mortgage insurance?

Ans: Mortgage insurance typically costs between 2.8% - 4.0% of the loan amount, depending on the down payment and insurer.

Que: How does mortgage insurance protect homeowners?

Ans: It enables homebuyers to purchase with a lower down payment while protecting lenders from financial loss due to default.

Que: Is mortgage insurance mandatory for all home loans?

Ans: No, it is required for mortgages with a down payment of less than 20% in Canada.

Que: How can I cancel my mortgage insurance policy?

Ans: For PMI, you can request cancellation once you reach 20% home equity. For government-backed loans, mortgage insurance remains until the loan is paid off.

Que: What is the difference between PMI and mortgage life insurance?

Ans: PMI protects the lender in case of default, while mortgage life insurance protection ensures the mortgage is paid off in case of the borrower's death.