Default insurance is in place to cover the lender in case the borrower defaults on his payments. It is mandatory in Canada for any mortgage loan over 80% of the equity/value of the property. In some instances lenders will require this for mortgages of less than 80%. Mortgage insurance is a cost to the borrower.

Default Insurance Providers in Canada include:

  • CMHC
  • Genworth
  • Canada Guarantee

Effective May 1st the following rate increase will come into affect for insured mortgages: Please see the linked news release from CMHC:

http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2014/2014-02-28-1100.cfm

Effective May 1st, CMHC Purchase (owner occupied 1 to€“ 4 unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.

Loan-to-Value Ratio

Standard Premium (Current)

Standard Premium (Effective May 1st, 2014)

Up to and including 65%

0.60%

0.60%

Up to and including 75%

0.75%

0.75%

Up to and including 80%

1.25%

1.25%

Up to and including 85%

1.8%

1.80%

Up to and including 90%

2.40%

2.40%

Up to and including 95%

3.60%

3.15%

90.01% to 95% —€“ Non-Traditional Down Payment

3.85%

3.35%