For a first-time home buyer, the types of insurance surrounding a mortgage can be confusing, so it’s important to know what insurance covers what.
There are 3 main types of insurance to know about when buying a home.
Mortgage Default Insurance – If you put less than 20% down on a home you are buying, Government rules are you must pay for Mortgage Default Insurance which covers the lender should you default on your mortgage payments.
There are three mortgage default insurers in Canada – Canadian Mortgage & Housing Corp. (CMHC), Genworth or Canada Guaranty) The purchase of this insurance solely benefits the bank/lender.
Mortgage Insurance and/or Life Insurance
You’ve just made the biggest purchase of your life: a new home for you and your family.
• What’s the best way to protect your investment if you die?
Insurance is the answer. But what kind: mortgage insurance or life insurance?
There are important differences between the two that we’ll examine.
Please note: Mortgage/Life Insurance is not mandatory to qualify for a mortgage.
You have made the biggest purchase of your life… how do you protect yourself and your family? Many people say they have life insurance through their work, but is it enough?
• The question you should be asking is – do you currently have enough life insurance in place right now, equal to your mortgage amount?
Top Benefits of purchasing Mortgage/Life Insurance
1. Peace of Mind – creates a sense of security that your loved ones will be taken care of if you pass on.
2. Mortgage Can be Paid Off – whereby any other policies that are held will be able to assist with other needs.
3. Family can Stay in their Home – if there is the unfortunate life event that is the death of the Mortgage/Life Insurance policy holder, the mortgage can be paid off which will allow the family to stay in their home and not become displaced, causing additional anguish.
4. The Younger you are, the Less Expensive – Which means that insurance is extremely affordable for a young, and likely, first time home buyer.
5. Good Health = Coverage for Unexpected Illness Later on – After illness strikes, it is more difficult to acquire life insurance.
Mortgage/Life Insurance is an option that anyone with a mortgage should consider. Ask me about a referral for reputable and credible insurance.
While we’re discussing insurance, there are other types of insurance you need to consider as well…
• Fire insurance – most lenders will want to see that you have fire insurance in place, prior to funding your mortgage to “protect” their investment.
Additional insurance options:
• Disability insurance
• Personal content insurance
Mortgages are complicated… BUT they don’t have to be! You need to protect your investment by engaging an expert.
Contact a Dominion Lending Centres mortgage professional to discuss a mortgage that works for you (not the bank)!
Dominion Lending Centres – Accredited Mortgage Professional
Originally Published: Oct 4, 2018, Dominion Lending Centre
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