REQUEST A FREE CONSULTATION...you will be glad you did...

Insuring your mortgage for peace of mind…
For most people, the biggest purchase they’ll ever make is a home. And chances are, much of that purchase will be financed by a mortgage. While people are quick to insure hard assets like homes and cars, less attention is paid to insuring debt, but think about it: if you lost a car and were not insured, you could probably survive.
But if you became disabled or died, who would make your mortgage payments? Would your estate have enough assets to discharge the mortgage? Or, would your prized possession have to be sold to pay off the bank? And where would your family live then? Insuring your mortgage is “absolutely crucial,” says Zoltan Padar, mortgage broker at Mortgagepro Ltd. successful brokerage headquartered in Calgary, Alberta “Your single biggest purchase in life in your house. The thought of leaving that unprotected to save a few dollars a month in insurance payments is incredible.”
Yet, people do it, he says, noting that about 50 percent of his clients reject his recommendation to speak to an independent insurance broker. There are different ways homeowners can insure their mortgage. Most banks entice customers to sign on for mortgage insurance when they take out a mortgage to protect the bank against loss if the borrower defaults. The premium is based on the amount you borrow.
When mortgages must be insured – high-ratio mortgages require lender insurance According to the Canada Mortgage and Housing Corporation, the federal agency responsible for affordable housing, certain mortgages must be insured to protect the lender. These are known as high-ratio mortgages. Mortgages with a loan-to-value ratio higher than 75 percent must be insured. What a high-ratio mortgage does is allow buyers with less than a 25 percent down payment to get into the housing game by mandating the mortgage be insured through either CMHC or GE Mortgage Insurance Canada Capital.
But high-ratio mortgages are expensive, adding thousands of dollars to your mortgage. For example, if you only have 5 percent to put down, you will pay 3.25% of the mortgage value as a premium for the insurance, says Zoltan.
That means a buyer with $15,000 for a down payment on a $300,000 home will tack on $9,262.50 to their $285,000 mortgage. “It adds up in a hurry,” he says. However, that insurance only protects the lender in the event of default. It does not protect home buyers in the event of death or disability. When mortgage insurance is voluntary – conventional mortgages and creditor insurance “More than half of mortgage defaults are due to a disability,” largely stemming from accidents or illness, says Padar. “It’s convenient with reasonable rates, you don’t have to go through the underwriting process. Most of it is immediate,” he says. As well, it covers both spouses and can include death and disability. “To me what mortgage insurance is, is peace of mind.”. However, Zoltan says bank insurance can be expensive, and he encourages clients to ask the mortgage broker to offer the best product it is out there. A term life policy may be a cheaper alternative to pricier bank mortgage insurance
The advantage to a term policy, he says, is that if you die during the policy, it pays your beneficiary the full amount. So if you have a $250,000 mortgage and buy a term policy for that amount and die five years later, your beneficiary receives $250,000, letting him or her retire the mortgage and keep any additional funds.
A bank policy, on the other hand, only covers the current balance owing on the mortgage If you opt for term insurance, Monica McLeod from MortgagePRO says you want to ensure it pays out in the event one spouse dies and that it isn’t a last-to-die policy. If it is, the cost of carrying the home in addition to other expenses could cripple the surviving spouse. You might also be able to leverage existing insurance more cheaply. For example, if your employer has a group life policy, you may be able to increase the amount of coverage to include your mortgage for only a few dollars a month.
The problem with term plans, she says, is that most mortgages are amortized over 25 years, well beyond the length of a 10-year term. That means the homeowner is renewing at a higher rate in the middle of the mortgage. As well, a separate policy is needed to cover disability and it can be expensive. Also, if homeowners depend on their work disability and life insurance policies, they could find themselves out in the cold.
As a result of years of research, MortgagePRO automatically offers life and disability insurance to all of it’s clients. Our provider has compatible products suits your needs for a piece of mind, says Zoltan, president of the most advanced Mortgage Brokerage; MortgagePRO. Proudly serving clients needs in the mortgage industry since the turn of the century with outmost success by providing not only a mortgage, but a solution and a plan for the future financial well being of its most precious assets; it’s clients.