Understanding Mortgage Insurance in Canada: A Complete Guide

Homeownership can be overwhelming, especially when it comes to understanding the various financial products involved. Among these, mortgage insurance is a critical component that can significantly impact your home-buying experience and financial security.

Whether you are a first-time homebuyer or looking to refinance your existing mortgage, understanding mortgage insurance is essential. So, this comprehensive guide to mortgage insurance in Canada will break down everything you need to know.

We will explore the types of mortgage insurance available, their benefits and drawbacks, the costs involved, and how they can affect your homeownership journey.

What is mortgage insurance?

In Canada, mortgage insurance is a financial protection product otherwise known as creditor insurance. It is typically offered by your mortgage lender. In the unfortunate event of your death, if your mortgage is still outstanding, mortgage insurance pays the debt you owe to your bank for your mortgage loan.

An example of how mortgage insurance works

Let’s say you are purchasing a house for $100,000.

  • You pay a 15% down payment ($15,000).
  • The amortization period is 25 years.
  • Leaving an $85,000 mortgage loan that you need to pay off over the next 25 years.

If you die within this 25-year period, your lender still expects to be paid back. Without this insurance, your family or your estate will need to come up with $85,000 by dipping into their savings or selling the property to settle the mortgage loan.

Mortgage insurance ensures that the mortgage loan is paid off in these circumstances. This kind of insurance is sometimes referred to as mortgage life insurance or private mortgage insurance.

Read our full review of the Best Mortgage Insurance Companies in Canada

What are the types of mortgage insurance?

There are three main types of mortgage insurance in Canada, 

  • Mortgage default insurance
  • Mortgage loan insurance
  • Optional mortgage protection insurance

Mortgage default insurance

Mortgage default insurance is mandatory coverage in Canada for homebuyers with a down payment of less than 20%. This insurance protects lenders in case the borrower defaults on their mortgage. 

For example, if you buy a house for $400,000 with a 5% down payment, mortgage default insurance reduces the lender’s risk and lets you secure a mortgage despite the smaller downpayment.

Mortgage loan insurance

Mortgage loan insurance, also known as CMHC insurance, works like mortgage default insurance, protecting lenders against the risk of borrower default. This insurance allows buyers to secure a home loan with a smaller down payment. 

For instance, if you put down 10% on a $500,000 home, mortgage loan insurance safeguards the lender, making it easier to obtain mortgage approval in the Canadian housing market.

Optional mortgage protection insurance

Optional mortgage protection insurance is an additional policy that homeowners in Canada can purchase to enhance their financial security. This insurance provides support to cover mortgage payments in case of unforeseen events such as disability, critical illness, or death.

For example, if the primary breadwinner in your family becomes critically ill, this insurance can help cover the mortgage payments, ensuring your family can maintain their home without facing financial hardship.

Benefits of mortgage insurance

Mortgage insurance has several advantages, like:

  • Financial security for lenders: Mortgage insurance, whether mandatory or optional, protects lenders. It reduces the risk of borrower default so that lenders can recover their funds even if the borrower is unable to continue making payments
  • Enables homeownership with lower down payments: Mortgage insurance makes homeownership accessible to more Canadians by allowing for smaller down payments. Without this insurance, many potential buyers would need to save for a much larger down payment, delaying their ability to purchase a home
  • Access to competitive mortgage rates: With mortgage insurance, lenders face reduced risk, which can result in lower interest rates for borrowers. This can lead to significant savings over the life of the mortgage and make homeownership more affordable
  • Stability in the housing market: Mortgage insurance contributes to the stability of the Canadian housing market by protecting lenders from widespread defaults. This stability can help prevent housing market crashes and maintain overall economic health
  • Stabilizes the housing market during economic downturns: During economic downturns, mortgage insurance plays a crucial role in stabilizing the housing market. By protecting lenders, it helps prevent a surge in foreclosures and supports market stability
  • Flexibility for borrowers: Mortgage insurance provides flexibility for borrowers to purchase a home sooner with a lower down payment. This flexibility can be crucial for first-time homebuyers or those looking to upgrade to a larger property
  • Enhanced borrower qualifications: With the protection of mortgage insurance, lenders are often more willing to approve borrowers who may not meet traditional lending criteria. This can include individuals with lower credit scores or those with less established credit histories

Drawbacks of mortgage insurance

While mortgage insurance comes with several benefits, it also has a few drawbacks:

  • High costs and added interest on premiums: Premiums can be high, and if added to your mortgage balance, you’ll pay interest on them over the life of the loan, raising the total amount paid
  • Impact on home equity: Premiums added to your loan balance can slow the rate at which you build equity in your home
  • Provincial sales tax requirements: In some Canadian provinces, mortgage insurance premiums are subject to provincial sales tax, increasing the overall cost
  • Long-term cost: While enabling homeownership sooner, the long-term cost of paying premiums over several years can be substantial

Key differences in insurance types

Mortgage Default Insurance vs. Mortgage Protection Insurance

Here’s how mortgage default insurance and mortgage protection insurance differ:

Feature Mortgage Default Insurance Mortgage Protection Insurance
Purpose Protects the lender in case the borrower defaults on the mortgage Protects the borrower by covering mortgage payments during unforeseen events like illness, disability, or death
Mandatory/optional Mandatory for down payments less than 20% Optional
Who it protects Lender Borrower and their family
When it’s required Required by lenders for high-ratio mortgages Can be purchased at any time by the homeowner
Cost Added to the mortgage and can increase monthly payments Separate premium paid by the homeowner
Coverage Covers the lender’s loss in case of default Covers mortgage payments or remaining balance upon certain conditions
Benefit payout Paid to the lender Paid to the borrower or their family
Eligibility Based on the down payment amount Based on the borrower’s health and risk factors
Tax treatment Premiums are not tax-deductible Premiums may be tax-deductible under certain conditions

To learn more about how mortgage default insurance works and how much it costs, head to our CMHC Mortgage Default Insurance Calculator.

Is mortgage loan insurance the same as mortgage protection insurance?

No, mortgage loan insurance and mortgage protection insurance are not the same. Mortgage loan insurance is mandatory for homebuyers who make a down payment of less than 20%.  Mortgage protection insurance is optional. Here are some of the key differences between the two:

Mortgage Loan Insurance

  • Often referred to as CMHC insurance, mortgage loan insurance is mandatory  for homebuyers who make a down payment of less than 20% of the home’s purchase price
  • This insurance protects the lender against the risk of borrower default. It ensures that the lender can recover their funds even if the borrower is unable to continue making mortgage payments 
  • The cost of mortgage loan insurance is typically added to the mortgage amount, which can affect monthly payments and the overall cost of homeownership

Mortgage Protection Insurance

  • It is an optional policy that homeowners can purchase to protect themselves and their families
  • This insurance provides coverage in case the homeowner experiences a critical illness, disability, or death 
  • The benefits of mortgage protection insurance are paid directly to the borrower or their family, helping to cover mortgage payments or pay off the remaining balance
  • Unlike mortgage loan insurance, mortgage protection insurance is not required by lenders and serves to offer additional peace of mind and financial security to the homeowner
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Do I need to buy mortgage insurance?

No, mortgage insurance is not mandatory to qualify for your mortgage. But your lender making it seem like it is. That’s because it protects them—not you.

However, it is smart to consider protecting the outstanding balance of your mortgage. A term life insurance policy that matches your mortgage term is a cost-effective way to protect your mortgage debt.

Read more about if life insurance is mandatory to qualify for a mortgage.

Mortgage insurance alternatives

Term life insurance can provide the same security as traditional mortgage insurance. This alternative is referred to as mortgage protection insurance. It is usually a more affordable option and provides more flexible coverage.

How to cover a mortgage debt with life insurance

Protecting a mortgage with life insurance works by getting term life insurance that is in force during the amortization period of your mortgage.

Your beneficiaries are entitled to a tax-free death benefit that never reduces and can be applied to whatever they choose through mortgage protection insurance.

Private mortgage insurance, as it is sometimes called, offers the same security throughout the riskiest years of your mortgage loan, with several additional benefits not offered by conventional loan insurance:

  • You can get coverage well beyond the amount of your mortgage balance
  • You get to pick your own beneficiary, instead of paying for insurance to protect the lender

Learn more about mortgage protection through term life insurance.

Mortgage insurance vs term life insurance – which is better?

While mortgage insurance pays off one’s mortgage in the event the borrower dies, other products can do a better job at protecting a mortgage debt.

A term life insurance policy can offer you better mortgage protection in a number of ways:

  • The policyholder chooses the beneficiary
  • In turn, the beneficiary can choose exactly how the benefit is used
  • The benefit can go towards paying off the mortgage and/or other uses, like servicing other debts or handling final expenses

Learn more about mortgage insurance versus life insurance.

mortgage versus life insurance

How much mortgage insurance do I need?

How much mortgage coverage you need depends on the value and cost of your home and several other facts. Unfortunately, you don’t get much of a choice if you go through your lender – the coverage amount is tied to the value and term of your mortgage loan.

However, life insurance allows you to cover your mortgage loan balance and many other financial needs, including:

  • child care
  • education costs
  • your family’s future living expenses
  • funeral expenses
  • anything your beneficiaries wish

Our insurance calculator can help you find out exactly how much coverage you need.

Learn more about how much life insurance you need.

How much does mortgage insurance cost?

The cost of mortgage insurance can be 2-4 times as much as a term life insurance policy. In the below table, you can see just how affordable term insurance can be.

Coverage 10-Year Term 20-Year Term
$250,000 $11/month $14/month
$500,000 $15/month $22/month
$1,000,000 $24/month $35/month

*Premium payments for female, non-smoker, 30-years old

Why is mortgage insurance expensive?

Lender-provided mortgage insurance is expensive because there is no underwriting. Underwriting is the process an insurance company goes through to determine the appropriate fees for taking on the financial risk of your death.

Without this stringent evaluation process, they are more blindly taking on the financial risk of your policy paying out.

Read more about why mortgage insurance is so expensive.

Where do I get mortgage insurance?

You can only get mortgage insurance from the lender who provided your mortgage loan.

However, term insurance is available from several companies nationwide and the expert advisors at PolicyAdvisor have reviewed them all. We can help you find the best provider to protect your mortgage and make insurance part of your financial plan. Contact us below for advice on protecting your foray into the real estate market, or other needs like critical illness insurance or disability coverage.

Need insurance help?

Give us a call at 1-888-601-9980 or book some time with our licensed experts.

Frequently asked questions

How long does it take to get an insured mortgage?

It generally takes anywhere from a few days to a couple of weeks to get an insured mortgage in Canada. However, the duration can vary depending on several factors, such as the lender, the complexity of your financial situation, and the completeness of your application. 

Why is mortgage insurance often considered expensive?

Mortgage insurance is often considered expensive because it adds a significant cost to your mortgage payments. The premiums for mortgage loan insurance are typically added to your mortgage balance, which means you pay interest on them over the life of the loan. Additionally, if you choose to pay the premiums upfront, it can be a substantial amount that makes homeownership more expensive.

Can I cancel my mortgage insurance?

In most cases, you can cancel your mortgage loan insurance once you have paid down your mortgage to less than 80% of the home’s value, meaning your loan-to-value ratio is less than 80%. However, if you have opted for optional mortgage protection insurance, you can typically cancel it at any time, but this will depend on the terms of your policy.

How are mortgage insurance premiums calculated?

Mortgage insurance premiums are typically calculated as a percentage of your loan amount. For mortgage loan insurance, the premium rate varies based on the size of your down payment and the loan-to-value ratio. 

For example, the premium might be higher for a smaller down payment. Optional mortgage protection insurance premiums are based on factors such as your age, health, and the amount of coverage you choose.

Is mortgage insurance a one-time payment?

No, mortgage insurance, typically offered by your lender, is not a one-time payment. It is generally included in your monthly mortgage payment and can only be canceled once you reach 20% equity in your home.

Do you have to pay mortgage insurance up front?

Yes, you can pay your entire mortgage insurance premium upfront, especially if you have sufficient funds to cover the downpayment, premium expenses, and other initial costs. Paying your mortgage insurance premium upfront can help lower your monthly mortgage payments.

What age does mortgage insurance end?

In Canada, mortgage insurance, also known as mortgage life insurance or private mortgage insurance (PMI), automatically ends when you reach the age of 70.

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The best life insurance for couples (2025)

Nobody wants to think about their death, but the hard reality is that with ageing comes questions about those you may leave behind. This goes doubly so for couples. When you have a significant other, you both are invested in finding the best life insurance policy for couples. Finding coverage for the two of you provides peace of mind should anything happen to you both.

Life insurance is readily purchased by couples for various reasons: replacement for loss of income, mortgage protection, leaving behind an inheritance for future children and grandchildren, or any other need to alleviate the financial hardship their death can have on their partners or children. These scenarios require decision-making. Do you need term life insurance or whole life insurance? Should you add child life riders? How much life insurance do you need and for how long?

Married couples and common-law partners alike need to contemplate one more big life insurance decision. Should you apply together or get individual life insurance policies? Let’s dig into your choices when it comes to life insurance for couples and whether one should get a joint policy or apply buy individual coverage for each single person.

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What are the different types of life insurance policies for couples?

There are mainly three types of life insurance policies or contract choices for couples searching for the financial security insurance offers. They are single life insurance (also known as individual policies or separate policies), joint first-to-die insurance, and joint last-to-die insurance. There is also an option for a “combined life insurance policy.” Similar to a joint life policy, this is one policy issued for both lives insured with a few differences.

Single life insurance policy

With a single life insurance policy, only one person is insured. The death benefit is paid out to a chosen beneficiary upon the death of that person – the policy owner. It is not tied in any way to a person’s marital status.

Keep in mind, if it is a term life insurance policy, the payout will be made if the death occurs during the term of the policy, the period of time you choose as your coverage length. If it is a permanent life insurance policy, there is no term, and the payout will happen whenever the life insured dies, as long as the policy is in force.

Joint first-to-die life insurance policy

Joint first-to-die life insurance covers the lives of two or more people (usually two). Under this type of life insurance policy, a single amount of coverage is placed on two or more insured lives, and the death benefit is paid out upon death.

What to choose between a single versus joint life insurance policyJoint last-to-die life insurance policy

Similar to a joint-first-to-die policy, joint last-to-die life insurance coverage is placed on two or more lives insured (typically two). The difference lies in the time of payout. For a joint- last-to-die policy, the death benefit is paid out upon the death of the last insured person to die.

Combined or Multi-life insurance policy

A combined life insurance policy covers two people, typically spouses or life partners. Both can choose separate coverage amounts or coverage terms under such a policy. An insurance company may also call it a multi-life policy. The advantage is one saves money by paying just a single policy fee. Thus you benefit from the flexibility and personalization of an individual life insurance coverage, while also obtaining a discount on the policy fee.

Both joint and combined life insurance policies for couples are good options for those with budgetary constraints or looking to cover a common need (such as mortgage debt). They can get the coverage they need to secure a debt or cover living expenses while only paying a single policy fee.

Life insurance for couples

What are the benefits of taking one life insurance policy for couples?

Lower policy fees

As discussed above, combined and joint-life insurance policies allow a couple to take coverage under a single policy, which is a less expensive way of seeking life insurance as you pay a single policy fee.

For example: you and your partner recently bought a home and have taken out a joint mortgage to cover the cost. You secure your mortgage by taking a joint-first-to-die policy and avoid paying the two policy fees.

The joint coverage includes a single coverage amount; you both can decide this amount based on the outstanding mortgage and its amortization period. The benefit is paid out upon the death of the first insured person. The survivor can then use the money to pay off the mortgage loan.

A penny saved is a penny earned; why not save the extra policy fee while comfortably getting the protection you need? While the amount may seem nominal month-to-month, it can add up to hundreds, if not thousands of dollars saved over the course of the coverage period.

And, as mentioned earlier, you can determine separate coverage amounts and terms for each insured life with a combined policy. In this case, you can also ensure that coverage continues for the surviving spouse or partner if one passes away.

One contract to manage

Keeping track of paperwork and physical contracts on top of regular financial responsibilities can be a pain. With a single policy for a couple, only one contract is issued. You have the ease of reading, managing, and storing just one policy instead of two.

Conversion to permanent insurance

Typically, joint life insurance policies let the survivor convert their term policy into a permanent policy without medical underwriting upon the death of the other life insured as long as they are within the policy term. While not strictly necessary, it gives the surviving partner the option to cover themselves for their entire life. In the case of a multi-life policy, the conversion option is available on both the coverages within the unified contract.

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What are the negatives of applying for life insurance as a couple?

We would be remiss to not mention the few disadvantages to life insurance for couples.

Joint policies do not have an option for splitting the coverage in two for any unforeseen reason. While we hope that every relationship lasts, the reality is that is not always the case. In the event you decide to end your marriage or relationship, you will not be able to split your joint policy. In such a case, you may likely have to cancel the joint policy, and both you and your partner will have to purchase new policies.

That said, most joint policies allow you to take individual life insurance coverage without undergoing medical underwriting upon divorce or dissolution. We cover the subject of joint versus single life insurance coverage in depth here if you are searching for more information about this particular situation.

Read more about life insurance and divorce.

Lastly, joint policies include only one death benefit and thus only pays out once. With a joint first-to-die insurance policy, if the survivor wishes to obtain new coverage it may not be easy to qualify later in life. And, if you do qualify, coverage will be more expensive in your later years.

Benefits of joint-life policy

When is the best time to apply for life insurance as a couple?

The best time to get a life insurance quote is always as soon as possible, as your rates will generally be less expensive in your earlier years. However, this is the easy answer. Couples have many trigger points that ad urgency to their life insurance needs. These can include moving in together, getting married, buying a home, getting a pet, or having children just to name a few.

Where can you get life insurance for couples?

While every couple’s situation and needs may vary, joint and combined policies are an excellent fit for those looking to save on money whilst getting the protection they require for their common needs.

Most of Canada’s best insurance companies offer various options for couples’ life insurance. Speak to our advisor today; they can discuss all the options at your disposal and help you choose the right policy and life insurance company for you and your partner’s needs.

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Mortgage Insurance Vs Life Insurance

Have you recently purchased a home or refinanced your mortgage? If so, you have probably opened your mailbox or email inbox to find several offers for mortgage insurance. Many people confuse mortgage insurance with other products, like mortgage default insurance. Before you make a choice, look at mortgage insurance vs life insurance for your protection needs.

There are a lot of good reasons to purchase life insurance in the first place, as anyone with young children or other dependents knows. Life insurance protects your family and loved ones if anything unexpected happens to you. But it’s not the first thing on new homeowners’ minds when thinking about protecting their new purchase.

What is mortgage default insurance?

Mortgage default insurance is a mandatory insurance policy required when the down payment for your newly purchased home is above 5% but less than 20% of the value of your home. This insurance is offered to protect the lender or financial institution, in case you as the borrower are unable to make the mortgage payments for any reason. In Canada, mortgage default insurance is currently offered by two entities: Genworth and Canada Mortgage and Housing Corporation (CMHC).

On the other hand, mortgage insurance is a product that you elect to purchase for a very specific reason. What is that you ask?

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Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them below.

What is mortgage insurance?

Mortgage insurance is an insurance policy, generally offered by your lender, that pays off the mortgage should the borrower die, while the principal on the loan is still outstanding. A mortgage insurance policy (sometimes referred to as a mortgage life insurance policy) requires a fixed cost premium payment by the borrower to cover a reducing mortgage debt for the benefit of your lender until the mortgage balance is paid. With mortgage insurance, the lender is covered. However, it doesn’t fully protect you or your needs. Our experience as insurance professionals shows there are other products that do a much better job of protecting your mortgage.

Read our full review of the Best Mortgage Insurance Companies in Canada

Are there alternatives to mortgage insurance?

YES! As mentioned, mortgage life insurance entails a fixed cost payment that covers a diminishing mortgage debt for your financial institution until the mortgage is paid. The alternative to mortgage life insurance is mortgage protection through term life insurance. It can better protect your investment and the life you’re building for your loved ones.

What is mortgage protection insurance?

Mortgage protection insurance is an insurance policy offered by insurance companies that protects the borrower through a term life insurance product. It offers a lot more flexibility than traditional mortgage insurance. Term life insurance can be tailored in a way to make certain that families can pay off the mortgage balance and also provide coverage for many other needs, in case an income earner passes away. Typically, you can choose between a range of terms such as 10-, 15-, 20-, or 30-year term to closely match the length of time you have left to pay off the mortgage.

How much mortgage protection do I need?

You would generally buy at least enough mortgage protection coverage to pay the balance of your mortgage, which may be at least $160,000 (StatsCan) Mortgage protection through life insurance can make sure that a surviving spouse and children will be able to keep the family home, even if the homeowner dies unexpectedly.

Through term life insurance you have the option to consider a policy with a death benefit larger than your mortgage to cover other such obligations as your child’s education, other debts, and living expenses for survivors. Our insurance calculator can help you determine the amount of life insurance you need.

Choosing Mortgage Insurance Vs Life Insurance

Sure – there are some small advantages to mortgage insurance; we would be remiss if we didn’t mention them. As it is offered by your lender, you pay for it when you make your monthly mortgage payments – no need to worry about missing it. That said, is this small convenience worth thousands of dollars? Because that’s what you’ll be overpaying for the same amount of coverage over the life of your mortgage.

Another supposed advantage of your bank-offered mortgage life insurance – there is no underwriting when you purchase. You qualify instantly without a medical exam. The caveat here is that the mortgage insurance is not a guaranteed coverage and is only underwritten at the time of filing of a claim, so your estate might find out after your death that you weren’t covered as well as you thought or maybe not covered at all. Besides the unfortunate circumstances around an early death, having to deal with the duress of further investigation into that death is stress your loved ones do not need at that time.

 Read our full review of the Best Life Insurance Companies in Canada

mortgage versus life insurance

6 Reasons Why Term Life Insurance is Better for Mortgage Protection

1 Lower premiums

Mortgage insurance premiums offered by your bank are usually higher than term life insurance premiums. And that’s not all: lender-option premiums also increase periodically with age.

While the procedure for applying for a lender-provided policy may appear simpler, it ends up increasing your cost of insurance. Much more work goes into the diligent underwriting of life insurance, thus the insurance company knows more about the risk of covering you, and is able to give a more accurate and lower price.

2 Guaranteed coverage

When you get life insurance the insurance company guarantees your coverage, independent of any changes in your health or lifestyle choices after the policy has been approved.

Insurance offered by your bank is not guaranteed for the term of your loan. Any adverse changes in your health can cause your bank to deny you a renewal of your coverage. Worse still, the underwriting for mortgage insurance is done at the time of the claim and the bank can decline your coverage if they learn that your health was not in line with their expectations at the time of taking the policy.

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3 Life insurance is portable

With lender provided insurance, selling your current home and buying a new one, refinancing your home through a different lender, or even renewing your mortgage with your existing lender, requires buying new insurance policies. The mortgage dependent policy does not move or ‘port’ along with your mortgage. That’s a benefit only available with life insurance, which stays with you for the length of the term.

4 Life insurance offers a consistent payout

As you pay down your mortgage debt, the amount of the mortgage insurance payout also goes down. A lower payout must mean lower premiums, right? No, your premium stays the same, even as your coverage reduces.

On the other hand, term life insurance policy amounts and premiums remain the same over the policy term. With term life insurance, the payout would be the same whether it is year 4 or year 24 of your amortization period.

5 You choose the beneficiaries of your life insurance policy

Life insurance pays out to the beneficiaries of your choice, most likely your family. It serves to protect them when you are no longer around. Mortgage insurance isn’t really designed to protect your family. It’s designed to ensure the lender receives their money, and the fact that your family may benefit from paying off the mortgage is secondary.

6 Flexibility in using life insurance proceeds

If you should die unexpectedly, perhaps paying off the mortgage isn’t your spouse or children’s first priority. They have no choice with a lender-provided life insurance policy, but with an individually-owned life insurance policy, they can decide on the best use of the proceeds. That might mean they use the money for a college education or paying off other debts.

Want to learn even more about mortgage insurance vs life insurance? Read our Honest Guide To Mortgage Insurance or schedule a call with one of our licensed brokers to discuss your specific protection needs. Even better: get a free instant quote for mortgage protection with our online tool – you only have to answer a few basic questions to get a clear picture of how much it may cost to protect your mortgage.

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How to save money on mortgage insurance

If you are looking at houses, then you must also be looking how to save money on mortgage insurance. This is especially true when there are fees and costs, like mortgage default insurance, that are unavoidable depending on your down payment.

For instance, many potential homeowner are wondering if they qualify for the federal government’s First Time Home Buyer incentive. Through this program, they can potentially get a top up on the downpayment for their new home. Unfortunately, that new home will also have to include CMHC insurance rolled into the mortgage loan costs. Something you hope to avoid, if possible.

However, those looking to save some bucks do have options.

How to save money on mortgage insurance right now

BetterDwelling reports that big banks and lenders are already taking a disproportionate amount of your hard earned dollars. Do you want to give them even more for an insurance product when there are better and less expensive options available?

If you read our guide – like all discerning readers should – you know mortgage protection is much better served through term life insurance. Having this choice sounds great – we know – but what does it look like in real life?

Let’s look at an example. We want to insure a mortgage in the amount of $500,000 (the principal) over a term of 25 years. The chart below shows the cost of doing so through your favourite bank’s mortgage insurance versus choosing life insurance for 30- and 40-year old applicants.

Mortgage protection through term life insurance vs lender-provided mortgage insurance*

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Cost for 30-year old man
Cost for 40-year old woman
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Wow. By shopping around instead of going with the product offered by your bank, you can save a ton of cash over 25 years, better spent on renos, furniture, and creating memories in your new home.

For the amateur mathematicians out there, if you were the 30-year old man, who decided to go for term life insurance, you would save $5,700 over the 25-year term, just in monthly cash outflow. And wait for it – if you were the 40-year old woman making the right insurance choice, you would save a whopping $18,400 by going with term life insurance over that 25-year term.

You could save tens of thousands of dollars by choosing mortgage protection through term life insurance.

Oh boy! We haven’t even factored in the cost of mortgage insurance premiums going up over time as you renew your mortgage rates. Or even still, that you could get even lower term life insurance rates if you were in good health, or that you could invest your monthly cash savings. You know where we could go with this!

Just like with mortgage rates, it pays to shop around for your mortgage insurance. Luckily we know of a place you can do that online, and within minutes. You shouldn’t need Scully and Mulder to find out the truth about mortgage protection. The lenders and banks have nowhere to hide.

*Bank mortgage premium reflects average of 4 major bank lenders with published rates.

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