Insurance

Mortgage Loan Insurance

Mortgage Loan Insurance helps protect lenders against mortgage default and enables consumers to purchase homes with a minimum downpayment of 5%. The amount of the insurance premium depends on the amount borrowed from the lender.

Mortgage loan insurance premiums can be paid in a lump sum or be added to your mortgage and included in your monthly mortgage payment. For more information, talk to your mortgage professional, or contact a Mortgage Loan Insurance provider.

Current mortgage loan insurance providers are:

• Canada Guaranty - (www.canadaguaranty.ca)
• Canada Mortgage and Housing Corporation (CMHC) - (www.cmhc-schl.gc.ca)
• Sagen - (www.sagen.ca)

The Federal Department of Finance has made a number of changes to promote more conservative lending practices on government-backed insured mortgages.

Measures include:

1. All insured mortgages need to be qualified using a stress test at whichever is greater of either the Bank of Canada benchmark rate (currently 5.14%) or the contract rate offered on the homebuyer’s commitment;
2. Maximum amortization of 25 years;
3. 5% down payment is required if the property value is less than $500,000, although purchasers can borrow towards this amount;
4. If the property value is greater than $500,000, the portion above the $500,000 will require a down payment of 10%. Ex. A property purchased for $750,000 will require a down payment of $25,000 for the first $500,000 and then an additional $25,000 for the $250,000 over the $500,000. This means a total down payment of $50,000.
5. Minimum credit score of 600;
6. Previously announced limit of 44% for total debt servicing replaced with a 'principles' based approach;
7. Enhanced documentation requirements including income verification and up to date appraisals;
8. Lowering the maximum amount that Canadians can borrow in refinancing their mortgage to 80% of value of the home;
9. Properties with a value over $1 million do not qualify for mortgage default insurance;
10. Properties purchased for investment/rental purposes, do not qualify for default insurance;
11. Withdrawing government insurance backing on lines of credit secured by homes such as home equity lines of credit (HELOCS).

Mortgage Life Insurance

Mortgage Life Insurance is designed to protect your family from the financial burden of paying off your mortgage in the event that something should happen to you. It is a life insurance policy that pays the balance of your mortgage to the lending institution.

Title Insurance

When you buy a home, you are buying title to the property. Title insurance protects that property. It is an insurance policy covering the condition of title or ownership of your property and is used to provide ownership protection against losses or damages suffered as a result of title problems.

Title Insurance provides the purchaser with coverage against title risks inherent in real estate transactions (including title fraud) for as long as you own your home.

For more information, talk to your mortgage professional, or contact the following Title Insurance providers:

• FCT
• FNF Canada
• Stewart Title Insurance Company
• Title Plus