When you buy a home with less than a 20% down payment, the mortgage needs to be insured against default. This type of insurance protects the mortgage lender in case you are not able to make your mortgage payments. It does not protect you.
Are you planning to purchase a property with less than a 20% down payment?
If yes, you require mortgage default insurance which generally adds 0.6% to 3.35% to the cost of the mortgage depending on the total amount borrowed.
Mortgage default insurance enables you to purchase a home with a minimum down payment of 5% (10% for multi-unit dwellings) with interest rates comparable to those of a conventional mortgage.
Major providers of mortgage default insurance include Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada, and Canada Guaranty Mortgage Insurance Company.
Information taken from the Homebuyers’ Road Map – www.crea.ca