Mortgage Default Insurance

Hi everyone, Aleem here with the Mortgage In today’s Mortgage Minutes we’re going to go over the difference between the mortgage insurers.
Now there are actually three insurers. There’s CMHC which is the term that most people use when referring to mortgage insurance. There’s also Genworth as well as Canada Guarantee. At present, Canada Guarantee is only used by a handful of lenders. Why is this significant? Well it is something to keep in mind, as you may be restricted with being able to transfer lenders down the road when your mortgage is up for renewal. We will go over this in more detail in a future episode.
Now the primary difference is that CMHC is government owned, but Genworth is private, so that gives them a lot more flexibility. BUT, because CMHC is backed by the government, most lenders prefer to go with them by default.
For those that aren’t quite sure the purpose of mortgage insurance, well it’s there to protect the bank against any potential loss due to default on your part. The government actually has made it a requirement to have mortgage insurance when you get a mortgage and you’re putting less than 20 percent down. So, it’s there for the protection of the banks interests, but you have to pay the premium.
As mentioned earlier CMHC is backed by the government and will cover 100% of any potential loss, Genworth will cover 90%. This is why every lender uses CMHC, and not every lender uses Genworth, or Canada Guarantee.
So, why is it important that we have options out there? Well, there are Many reasons. But the one that will affect you the most is unauthorized basement suites. If you find a home that has a basement suite and it’s unauthorized or illegal, then CMHC won’t recognize the rental income you can earn from it towards your qualification. So, if you need this income to qualify, then you’re going to have to go to a lender that uses Genworth, and even Canada Guarantee, because they will allow this.
Now is that always the case where Genworth is better? Absolutely not. CMHC is great for the majority of transactions, but having other options there, it keeps CMHC in check. It creates a healthy level of competition in an area where you never want someone to have a monopoly in.
How the others compensate not being backed by the government is providing a little more flexibility and the ability to do those deals that wouldn’t otherwise get done because of the government mandates, but make absolute sense when it comes to seeing it on paper for a lender.
There are a few other advantages of going with Genworth, which I’ve discussed in another video titled “what is CMHC”. Feel free to check it out, or even better give me a call if you would like more details.

For, I’m Aleem Peermohamed


Bank of Canada Rate Announcement

This move is a very proactive move on the part of the Bank of Canada. The Bank of Canada Announcement was justified as a stimulation of our slowing economy. Not only in the Oil and Gas sector but in other facets of our economy across the country.

Canada Mortgage Rates- a Handy Guide to cibc mortgage rates

Variable rate mortgages can have open or closed terms, for 3, 4 and 5 years. Most Canada mortgage rates variable rate mortgages can be locked into a fixed rate mortgage without penalty providing you lock in for at least the remainder of the term.


Coronavirus related to your mortgage

How is the Coronavirus related to my mortgage? Believe it or not, the coronavirus can have an impact on your mortgage and your interest rate in particular. Listen below to find out exactly how and why.

One of These Three Things Have to Go Wrong For Lower Rates

All of these things—falling yields, narrowing credit spreads and more discounting—could easily happen by year-end (not a prediction, just fact). Spreads and discounting will naturally improve if/as mortgage default fears subside.


Variable Rate Update – June 2020

If you are shopping for a non-prime mortgage at a federally regulated lender, plan for a 1% lender fee as well. That’s the cost of doing business with a more risk-tolerant lender. Many refer to it as “the cost to self insure your mortgage”.

Bank Mortgage Rates

Selecting the right mortgage product is a lot more than just finding the lowest bank mortgage rate. The main point of the article is that banks are changing their marketing strategy because what they have been doing in the past is not as effective in today’s ultra-low rate environment.


Mortgage Pre Approval – How We Saved A Client’s Deal

This should be a lesson to all on the importance of getting pre-qualified by a Mortgage Professional. The realtor and the client had been working together for about 4 months to find the right fit. The client was on a tight budget and therefore the options were fairly limited.

Mortgage Default Insurance

For those that aren’t quite sure the purpose of mortgage insurance, well it’s there to protect the bank against any potential loss due to default on your part. The government actually has made it a requirement to have mortgage insurance when you get a mortgage and you’re putting less than 20 percent down.


One Way Get a Mortgage without the Stress Test

You will generally get the lender’s best conventional insurable or default-insured rates to boot. If you correspond to A, B and C above, a mortgage broker is your best source for lenders who make this stress test exception.



If you would like more information or a free consultation contact Aleem below, and as a Certified Mortgage Specialist let me help you get the home of your dreams. Great Mortgages, Made Simple
Aleem Peermohamed - Mortgage Broker BC


More Posts

no interest rate hikes

Independent Mortgage Planner

Who Should You Get Your Mortgage Through? Hi Everyone, this is Aleem Peermohamed – The Mortgage Specialist Vancouver BC. One of my existing clients, who

Four Reasons To Save Money

Four Reasons To Save Money It’s not rocket science -everyone should be saving money regardless of how much you are making. The concept of saving

Mortgage Check-Up?

Eight out of Ten Canadians make a trip to the doctor at least once a year to help ensure they remain physically healthy. But how

Send Us A Message

Scroll to Top