Mortgage Insurance Ontario:
Mortgage insurance in Ontario Canada provides peace of mind and is also required for buyers with smaller down payments. Mortgage loan insurance or Mortgage Default Insurance protects the money lender from a mortgage default. This in contrast with a mortgage life insurance policy that pays the balance of the mortgage in case something were to happen to you to prevent a burdon on your estate.
This is a Federal requirement for lending institutions which helps many people in Canada purchase their first home, or refinance an existing home to utilise their equity.
If you are buying a home for less than 20% down payment, or in other cases where the lender requires insurance against your possible default, a sliding scale of fees applies, depending on the percentage of the purchase price required in a first mortgage (some minor exceptions).
For example, a 5% down payment means that a Default Insurance premium of 2.75% of the mortgage amount will be added to the mortgage. A purchase of $200,000 with 5% down payment will result in a Default Insurance Premium of $5,225. Although this premium does not have to paid upfront, you will have to pay the Provincial Sales Tax (PST) portion of the premium on closing (see below)
PST on Default Insurance
PST is charged on the Default Insurance premium and it is required to be paid as part of the closing costs. In the example above, 8% PST will be payable on the Default Insurance Premium of $5,225 so $418.
Land Survey or Title Insurance
This is a legal written and/or mapped description of the location and dimensions of your land. The survey should also show the dimensions and placement on the lot of any structure, including additions such as pools, sheds and fences.
An up-to-date survey is often required by a lender as part of the mortgage transaction or alternatively a Title Insurance policy can be obtained at a cost of approximately $250. The Title Insurance policy covers a wide range of oddball situations that could threaten your title to the property including Title Theft.
Title insurance is much less costly than a new survey, for example, and would cover most survey concerns anyway. Most homebuyers now look at title insurance as a great way to protect their biggest investment! The lawyer will arrange this for you and will include any cost in the list of disbursements.
Mortgage insurance on your Canadian home purchase is an important part of the planning that goes into the home buying process. Let Claire help you get all of your documents in order and find you the best mortgage in Ontario Canada.