Canada Mortgage and Housing Corporation offer mortgage loan insurance. It is typically required by lenders when a home buyer has a down payment of less than 20% of the purchase price. This insurance helps protect lenders against mortgage default (if you are unable to pay your mortgage). This enables consumers to purchase homes with a minimum down payment of 5%. Interest rates are comparable to those that are offered to buyers with a 20% down payment.
In order for a buyer to obtain mortgage loan insurances, their lender pays an insurance premium. This generally gets passed onto the purchaser (you). The premium is based on a percentage of the homes purchase price that is financed by a mortgage. This premium can be paid in one lump sum, however, most buyers like to add the total to their mortgage and pay with their mortgage payments.
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