For many first-time home buyers, coming up with the 20 per cent down payment required to qualify for a mortgage without paying extra for insurance is tough. So most first-timers end up having to pay for the insurance, which can cost anywhere from half a per cent to 2. 9 per cent of the total mortgage amount.
The Canada Mortgage and Housing Corporation (CMHC) provides the insurance which protects your bank against from a default. This means, if you can't pay and the bank can't get its money back after it has sold your property, the insurance will cover the lender's expenses.
Here are a few more things you should know about mortgage loan insurance:
Self-employed people pay more
Homebuyers who have a stable income will have a lower insurance premium than those who own their own business or are self-employed.
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