Mortgage Insurance

Over the past few weeks/months, I’ve been reading about real estate. One thing learned was that, if you buy property and put down less than 25%, you pay mortgage insurance on the full value of the mortgage, at a rate that varies depending on how much you actually put down (from 0 to 25%).

Mortgage insurance, however, does nothing to protect you and does everything to protect the lender. In other words, your mortgage insurance payments lower your risk profile and allow you to take on greater debt (i.e. make a smaller down payment) while adding, say, 0.5-2.9% to the total value of your mortgage. Fascinating. And crappy.

Here’s a piece (from 2005 though) from Canadian Business that spills the beans: “Mortgage Insurance: Homebuyer Beware”

Over the next few weeks, I’ll see if there’s an update to this. Current CMHC mortgage insurance premiums are listed here.


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