Mortgage Insurance

Mortgage insurance provides default or high ratio insurance that protects the lender against the risk of lending to homebuyers who have less than a 20% down payment. You, the borrower, pay this premium, which is added to your mortgage principal and protects the lender in the event the mortgage is not paid. This is not the same as creditor insurance. Mortgage insurance is provided by the Canadian Mortgage Housing Corp (CMHC) or Genworth Financial. Some buyers prefer to save for a longer period of time so they can bypass paying mortgage insurance. While others choose a high-ratio mortgage even if they can make a larger down payment. Why? Because of the flexibility to use the extra cash for renovations, business need or for investment purposes.