An Insured Mortgage covered by Mortgage Default Insurance is called an Insured Mortgage.

Lenders apply for Default insurance, this default insurance covers the lender (not the borrower) against any losses related to borrower default and foreclosure. Currently, there are three insurers in Canada; CMHC, Canada Guaranty and Genworth.

Each of these insurers offers two types of insurance coverage.

Transactional Insurance, referred to as a High Ratio Mortgage: The one-time premium is added to the requested mortgages with Loan to Values greater than 80% (sometimes added to lower LTV’s in unique situations). This insurance premium is added to the mortgage balance at the time their mortgage is advanced. Lenders pays the insurers and the Borrowers are responsible for paying the insurance premium. The insurance premium is tiered and reduces, in case clients puts more down payment.  You can see a full breakdown of the premiums here

Portfolio Insurance or Bulk Insurance: This insurance is applied to mortgages with Loan to Values less than 80%.  Most often borrowers are not even aware that this coverage has been purchased as the premium is paid for by the lender or bank.  Mortgage Lenders like First National, Manulife, Marathon and MCAP have used this type of coverage on all the mortgages they fund. Big Banks also use this insurance to a lesser extent.  Mortgage Lenders buy this type of insurance in order to offer better  mortgage rates.

Since default insurance is added to help protect the lender, insured mortgages are viewed as a more secure and therefore borrowers often receive lower rates.

Contact your Finser Mortgage Broker or Agent to help you find the right mortgage solution suitable to your needs.

The ripple effects of the coronavirus are being felt on Canada’s bond market, which is translating into lower mortgage rates. Variable-rate mortgages are generally tied to the Bank of Canada’s overnight benchmark rate. Their fixed-rate counterparts depend on the five-year Government of Canada bond yield, which fluctuates with market forces. It’s fallen sharply since the coronavirus first surfaced.


Second Mortgage

Second mortgages refer to the mortgage you take out on a home with a pre-existing mortgage plan. Second mortgages are a complicated plan to consider and you should really look at other options before considering them. If you require a low amount or want a simpler plan which doesn’t wreak havoc on your finances, consider other options such as bank loans. Here are the top four things to about second mortgages that can help you decide if they are right for you.

  1. It provides easy access to a large sum of money.
    The top benefit of getting a second mortgage is that you can have quick and easy access to a large sum of money. You would be taking this mortgage against the remaining equity in your property. Second mortgages can cover a higher amount than your initial mortgage. They allow you to access a large amount of the equity lying in your home.
  2. Second mortgages can be taken for a lot of reasons.
    The amount you get from your mortgage can be used for multiple reasons. People take out second mortgages for paying off education loans or credit card loans. It can even be used to fund a renovation or the purchase of a new property. It can even help when you are considering a refinance and do not want to pay the penalty associated with breaking the term. It can be useful to pay off other mortgages. With other plans, you may be limited to the amount of money you are allowed to borrow. But this can help you access a lot of equity and provide you with a large amount of money.
  3. Mortgage lenders are available aplenty.
    There are a lot of places you can borrow money for your mortgage from. Bankers, private lenders and more financial institutions have come up to help you secure a loan which serves your needs. It is best to go through a mortgage broker as so many options could be confusing to someone who isn’t seasoned in these deals. You can avail the best offers with the help of a broker.
  4. The Higher is the norm.
    Such mortgage plans allow you to access more equity in your home and hence are susceptible to higher rates. The mortgage lenders are taking a huge risk as they are willing to be paid second and hence the higher rates.