You know the value of being a responsible homeowner. If you treat your home as a proper investment, it will boost the financial security of both your present and your future. That's why you're on the hunt for the best mortgage insurance available for your new home.
Still, it can be tough to navigate the ins and outs of everything that comes with mortgage insurance. Living in Canada, though, there are plenty of trustworthy options available to suit your needs. To start, you know you have to do plenty of research on the topic.
The good news is that you've come to the right place by reading this article. Detailed below are eleven things to consider when hunting for the best Canadian mortgage insurance.
You deserve to have the peace of mind that comes with having the best mortgage insurance Canada has to offer you and your family.
1. Remember That Mortgage Insurance Is an Investment
Many homeowners might at first glance consider mortgage insurance to be unnecessary. It can seem like just another expense added to the already expensive mortgage process.
Still, this isn't the best mindset to have. Mortgage insurance is an investment in your property, your family, and your family's future.
It might seem like you're handing out a lot of money for no reason. Remember, though, that mortgage insurance could save your family some serious headaches in the future, which makes it worth your consideration.
As you start looking at mortgage insurance, don't get disheartened if it seems expensive. It will cost something, sure. Not getting mortgage insurance could eventually prove to be even more so.
2. Understand the Basics of Mortgage Insurance
You might like the idea of getting your mortgage insured. At the same time, you might not know exactly what mortgage insurance is or what it can do for you.
To start, understand that mortgage insurance is sometimes referred to as mortgage life insurance. That's because mortgage insurance provides coverage to the lender of your mortgage in the case that it cannot be paid.
In other words, if you die, your family will not be responsible for the mortgage left behind.
This can be a huge benefit, especially if you are the primary provider of finances within your home. Instead of leaving your family behind with a huge mortgage in their hands, take care of them by getting mortgage insurance ahead of time.
3. Major Canadian Mortgage Insurance Providers
There are two major Canadian mortgage insurance providers for you to consider. One is a company, and one is a government agency.
Genworth Financial Canada, sometimes known as the Homeownership Company, is perhaps the largest private insurer in the country. You can trust that they've handled thousands and thousands of mortgages for families just like yours.
In contrast, you can also look into Canada MortgageHousing Corporation, which is managed by the government. No matter what insurance provider you prefer to work with, you need to ensure that you can trust them with your investment. Continue reading to learn how to ensure that trust.
4. Research the Reputation of the Investment Provider
Perhaps you like the major insurance providers listed above. Since they're so widely used, it's easy to see that they have established a reputation worth their popularity.
Perhaps, though, you'd prefer to work with a smaller private insurance company for your mortgage. If that is the case, you have a little bit more research you have to do.
Start by analyzing the smaller company's website. Is it updated and sophisticated? An outdated or unprofessional website should be a deterrent, so don't be afraid to keep looking.
Plus, take a look at any social media presence of a potential mortgage insurance provider. If they have an established online community who seem to be loyal to their business, they're likely trustworthy with your investment.
You can also take a look at online reviews from previous customers to get a good idea of who is or is not worth your time and money.
5. Consider the General Mortgage Insurance Requirements
There are a couple of nationwide requirements you'll need to think about when applying for mortgage insurance. To start, the home obviously has to be in Canada itself. In addition, the value of the home cannot exceed $1,000,000.
Your financial situation will also play a part in the process. You typically need to be able to pay a down payment of at least 5% of the entire mortgage's cost. Plus, your entire household income should exceed at least 40% of the mortgage payment.
It's true that you'll need to work out a very strict budget if you're going to maintain the status of your mortgage insurance. It can be a good idea to get professional advice if you aren't comfortable exploring this option on your own.
6. Make Sure You Take Advantage of Every Kind of Deduction
If you're willing to do the research, you'll find that you might qualify for certain deductions to your insurance payment. For example, a proven energy efficient home could reduce your financial obligation. Check out this article for more information on saving on your insurance premium with a sustainable home.
7. Your Mortgage Insurance Provider Should Prioritize Customer Service
As mentioned above, you need to make sure your insurance provider has a solid reputation. For one thing, you don't want to get taken advantage of.
When you initially make contact with a potential insurance provider, analyze their customer service. Are they friendly to you and willing to answer any of your questions? Do they seem interested in finding the best deal for you, or are they just trying to sell to you?
Buying mortgage insurance is about providing you with a peace of mind. That means that every step of the way, you should feel at ease when interacting with your insurance provider.
8. Take the Canadian Real Estate Market Into Consideration
There are currently some good and some bad things about the housing market in Canada. The good news is that some statistics show that the average home price in the country has dropped over 10% within the past year or so.
That's good news for any homebuyer, but there's still unfortunate news concerning the market as a whole.
Over the past decade or so, Canada has witnessed a rise in the overall mortgage debt. In fact, there is over $1.2 trillion in mortgage debt throughout the country! Don't be rash or irresponsible with your investments to avoid a crushing amount of debt in the future.
Lastly, studies show that nearly half of existing mortgages in Canada might have to be renewed within the next year or so. That's because as the housing prices drop, mortgage rates go up. These rising rates are causing many families to refinance and readjust their situation.
Stay on top of your financial security by ensuring you have a secure income. That income should be able to cover not only current interest rates but also any potential increase in those rates.
9. Limitations of the Mortgage Insurance Canada Has To Offer
As mentioned above, mortgage insurance is very similar to life insurance. There are some exceptions to this, though.
Remember that upon your death, the mortgage insurance is not directly paid to your family. Rather, the insurance provider pays the lender directly, ensuring that the mortgage is taken care of.
Plus, there are sometimes expiration dates to insurance payouts upon the death. That's why it's always important to read all the details in the fine print before you sign.
You should also make sure your family is thoroughly prepared for the details of the policy in the unfortunate event of your death.
10. Why Mortage Insurance Might Be Best for You
Many people, because of the above limitations, prefer to invest in a regular life insurance policy instead of mortgage insurance. Still, mortgage insurance is the better option in some cases.
This is true, in particular, if you are older and already have medical issues to consider. Most life insurance policies are more expensive in such cases.
At the same time, there's nothing wrong with getting mortgage insurance if you're still young and vibrant. It only adds extra security in the case of an accidental death - especially if you can afford it. Your family would be that much more protected.
Mortgage insurance policies, though, don't take someone's medical condition into consideration. They will pay the lender of the mortgage no matter what if you or your family are unable to.
11. You Might Get a Better Mortgage Deal with Insurance
If you can, you should purchase mortgage insurance at the time of negotiating your mortgage. Mortgage lenders like to see that their interests are covered in the case of your untimely death.
That means they're likely to give you a lower mortgage rate, which could help you offset the cost of your insurance premium.
Find Your Mortgage Broker To Get Started
At the end of the day, there's a lot to consider when it comes to mortgage insurance Canada has to offer. You deserve to have all of the information you can get before you invest in such a major financial risk.
We encourage you to find the best mortgage broker in your area to get started on securing a financially sound mortgage and insurance policy.
