Mortgage insurance (also known as mortgage guaranty) is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Mortgage insurance can be either public or private depending upon the insurer.  For example, suppose Mr. Smith decides to purchase a house which costs $150,000. He pays 10% ($15,000) down payment and takes out a $135,000 ($150,000-$15,000) mortgage on the remaining 90%. Lenders will often require mortgage insurance for mortgage loans which exceed 80% (the typical cut-off) of the property's sale price.

Because of his limited equity, the lender requires that Mr. Smith pay for mortgage insurance that protects the lender against his default. The lender then requires the mortgage insurer to provide insurance coverage at, for example, 25% of the 135,000, or $33,750, leaving the lender with an exposure of $101,250. The mortgage insurer will charge a premium for this coverage, which may be paid by either the borrower or the lender. If the borrower defaults and the property is sold at a loss, the insurer will cover the first $33,750 of losses. Coverage offered by mortgage insurers can vary from 20% to 50% and higher.

GET iT^® Insurance has a network of qualified, trusted and experienced licensed insurance agents, brokers and brokerages across Canada.  Let us connect you with an insurance professional in your area to get an insurance quote or estimate that meets your individual needs.  Our network of insurance agents, brokers & brokerages provide term life insurance, permanent life insurance, critical illness insurance, disability insurance, mortgage insurance, and insurance solutions for people that have no medical insurance.