What is a high ratio or insured mortgage?

When you purchase a home in Canada with less than a 20% down payment, it is considered a high ratio or insured mortgage. Canada Mortgage and Housing Corporation (CMHC), Genworth Financial and Canada Guarantee are default insurance companies that protect lenders in the event a borrower defaults on their mortgage. If a borrower stops making their mortgage payment, the insurer will handle the legal proceedings and compensate the lender if there is a loss after the property has been sold. Default insurers charge a one-time insurance premium, included on top of your mortgage amount.

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