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24 May

What Mortgage Insurance Means for You

General

Posted by: Sarah Boudreau

What Mortgage Insurance Means for You

Mortgage insurance is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Mortgage insurance can be either public or private depending on the insurer. There are three mortgage insurers-Canada Mortgage and Housing (CMHC-public), Genworth (GE-private) and Canada Guaranty (CG-private). A purchase with less than 20% down payment will always require mortgage insurance, and at times a lender will require a purchase of 20% or more down payment to be insured.

CMHC:

100% backed by the government

  • Maximum $600 Billion in exposure across Canada

Genworth:

  • 90% backed by the government
  • Maximum $300 Billion in exposure across Canada

Canada Guaranty:

  • Canadian owned by the Ontario Teachers’ Pension Plan along with National Mortgage Guaranty Holdings. Previously owned by AIG
  • 90% backed by the government
  • Maximum $300 Billion Exposure

 

Insurer Guidelines and Restrictions:

CMHC:

  • CMHC will only allow one insured mortgage per person; this means a client who may have had a mortgage for 15 years that was originally insured through CMHC may not be able to co-sign for their children through CMHC if that mortgage has not since been refinanced to remove the original CMHC insurance.
  • CMHC does not insure mortgages for Rental Pool Buildings or where there is a high percentage of nonowner-occupied units
  • CMHC will not insure age-restricted buildings
  • CMHC will consider buildings with post-tension cables or condo conversions
  • Will not insure purchases $1,000,000 or higher
  • 25-year amortization only

Genworth & Canada Guaranty:

  • Both insurers will consider two insured mortgages, but the file must be very strong, and the properties must have good equity positions
  • Both will consider insuring age-restricted buildings
  • Neither insurer will consider insuring properties that have post tension cables
  • They will not insure in complexes involving rental pools or where there is a high percentage of nonowner-occupied units
  • Will not insure purchases $1,000,000 or higher
  • 25-year amortization only

 

As always, if you have any questions, let me know.