With increasing interest rates, many people are feeling the squeeze on their monthly finances.
If you are paying for mortgage insurance on top of your mortgage payments, it can get very expensive. The better way to go is personal life insurance and this will be accepted by any Canadian lender. Here are the differences between the two.
Mortgage Insurance From Your Bank
The bank owns the policy and it cannot be switched to another lender.
If you die, then lender pays off the mortgage, your beneficiary has no options or choices.
No flexibility, you have to use the lender’s product.
If you sell your home the policy is cancelled.
As you pay off the mortgage, the coverage goes down, but the premiums remain the same!
Dollar for dollar generally very expensive.
Personal Life Insurance
You own the policy and can switch it to another lender without jeopardizing your coverage.
If you die, your beneficiary can do as they wish with the proceeds, including pay off the mortgage.
You can choose insurance that best suits your needs from a variety of Canadian insurance companies.
Your protection stays in place when the property is sold and it can be ported to cover a new home at no cost.
Coverage never decreases as you pay off the mortgage.
Dollar for dollar generally much cheaper.
Now you might be thinking this is a no brainer - what’s the catch? Well, there isn’t one. The reason for it - is that the Canadian banks are not permitted to sell fully underwritten insurance products, that’s becuase their staff are not insurance licensed. You also might be wondering why you had not heard about this before? The reason for that, is most likely - that when you signed your mortgage papers, the bank/lender insurance is one of the documents you are given to sign. They do offer disclosure, but they don’t tell you about the cheaper alternatives.
To give you an example, recently we had a lady client who was paying around $180 a month for her mortgage insurance and we got it down to $78.00 a month.
If you are not sure what insurance you have on your mortgage, we will gladly take a look at it for you.
