6. What is mortgage loan insurance and does it apply to me?

Mortgage Loan Insurance is insurance currently provided by the Canada Mortgage and Housing Corporation (CMHC), and Genworth Financial. This insurance is required by law in Canada to insure lenders against default on mortgages with less than 25% equity or a loan to value ratio (LTV) of greater than 75%. The insurance premiums, ranging from .50% to 7.30%, are paid by the borrower and can be added directly to the mortgage amount. This is not to be confused with fire insurance coverage or Life Insurance. (Click here for more information on High-Ratio insurance premiums).

Mortgage loan insurance would apply to you if you have less than 25% as a down payment in the case of a purchase, or less than 25% equity in your existing home in the case of a re-finance. For example: on a value of $100,000 you would be borrowing no more than $75,000 on your mortgage for mortgage loan insurance not to apply. Any amount borrowed over $75,000 would have to include a mortgage loan insurance premium. This leads us to the next most frequently asked question.