Mortgage Default Insurance is one of the most commonly confused terms. When it comes to insurance and your mortgage, there are many different terms associated with it, this is why it gets so confusing. On this page I am only going to be speaking about Mortgage Default Insurance.
Mortgage Default Insurance, is MANDATORY for HIGH-RATIO MORTGAGES. These mortgage are the ones who provided a down payment of less than 20%.
There are three common names associated with Mortgage Default insurance.
1. Mortgage Lender Insurance 2. Mortgage Loan Insurance 3. Mortgage Insurance. (Again through this explanation, I will only refer to it as Mortgage Default Insurance)
An easy way to remember if you are talking about Mortgage Default Insurance, rather than Mortgage Protection Insurance is to remember the 3 companies.
1. CMHC 2. Genworth 3. Canada Guaranty
Why is it Mandatory?
You have to remember, mortgage default insurance is NOT to protect you. It is to protect the lender if you miss a payment. A lender gets this insurance to protect them so if their client misses a payment they will not be effected. The lender also passes the cost of this insurance onto you. Most of the time this is done by adding the insurance to the principal balance of the mortgage.
As this is insurance, each company's fees will vary, and so will their guidelines. You are able to find more information about each company here: