We often receive questions regarding Mortgage Insurance and generally, one is “Can Mortgage Insurance be paid Upfront?” If you are unable to put a down payment of at least 20% of the cost, then you will be required to get Mortgage Insurance.
Mortgage Insurance was added by the Federal Government to help the average Canadian buying a home. Previous to mortgage insurance, it was mandatory to put a 20% down payment. This insurance protects the lender in the event that the borrower defaults on the property with little equity. If you are looking to minimize your monthly payments, an option that many people consider nowadays is to pay their mortgage insurance upfront. The premium payment can be paid as part of the closing costs or financed in the loan. Some lenders are using lender credits or premium pricing to pay the premiums. Other lenders will pay the mortgage insurance upfront and then charge you, the borrower, a slight increase in interest rates to cover the costs. Therefore, it may take a little longer to pay off the loan. An advantage to paying your mortgage insurance upfront is that you could qualify for a larger loan.
When looking to see if Mortgage Insurance can be paid upfront, it is important to look at the two main insurance companies in Canada, Genworth and CMHC. Both can charge slightly different fee’s and offer a range of benefits to both the borrower and the lender.
If you have any questions about mortgages, mortgage insurance, or if you’re still unsure if mortgage insurance can be paid upfront, give Team Jardine a call at (506) 471-4210 or toll-free at 866-957-2263 and we will be glad to answer all of your questions. We deal with upward to 40 lenders and charge no broker fees.