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Where to Get a Canadian Insurance Mortgage

A Canadian insurance mortgage is something that costs loan owners a huge headache because of its expensive existence. The law basically requires loan owners to insure their own mortgage if their down payment for their new home is equivalent to less than a quarter or 25% of the purchase amount of their home.

Generally speaking, however, most insurance companies tend to ask for insurance mortgage when the loan applicant is able to put down less than 20% down payment. However, there are still some insurance companies that insist of insurance mortgage even if the client’s down payment is above 25% and purely to lower their risk of not getting paid.

Low Competition Means Higher Rates

In the old days, there were only two companies that offered insurance mortgage to Canadians: Genworth Financial Canada and the Canada Mortgage and Housing Corporation (CMHC). Due to the lack of competition, these two companies were able to get away with posting extremely high prices for their insurance mortgage products.

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At Genworth Financial Canada (genworth.ca), clients who can pay 35% down payment can expect 0.50 as their standard premium rate. Those who only put up 5% of the purchase amount of their home for down payment will, however, be charged with a standard premium rate of 2.75.

In recent years, American finance companies have been crossing over and bringing with them lower rates for a Canadian insurance mortgage. A good example of this would be AIG United Guaranty - Canada (aiguginternational.com), which offers insurance mortgage for other types of loans such as those dealing with different types of assets or loans purchased for different purposes like self-construction and second homes.

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