What is Mortgage Insurance in Ontario (CMHC or Genworth)?
To begin, separate from mortgage life insurance or home, property, fire and casualty insurance, mortgage insurance provides protection to the institution as a lender in the event of a default. If the amount of the mortgage exceeds 75% of the lending value of the mortgaged property, the mortgage is considered a “high ratio” loan and therefore subject to “be a perceived risk”. Accordingly, and as required by law, mortgage insurance must be purchased for the full amount of the mortgage (not the full amount of the purchase price). Mortgage insurance is available from CMHC and GEMICO and it is generally the institutional lender who will choose between the 2 and make the application. The premium is subject to PST 8% tax which is required for payment at time of closing. An application fee and an insurance premium (which can be added to the mortgage amount) are due to the insurer. In some cases an institution may require a mortgage to be insured even if the loan-to-value ratio is less than 75%
