When buying a home most of us have to take out a mortgage to finance the purchase of that property.

Mortgage Loan Insurance or Mortgage Default Insurance is different from mortgage life and/or disability insurance. With mortgage life insurance, should the person who took out the mortgage die, the life insurance proceeds will be used to pay off the mortgage. Any excess life insurance and the property, unencumbered, will then go with the rest of the estate to those who inherit.

Mortgage Loan Insurance or Mortgage Default Insurance is different in that the mortgage loan itself is insured. In the event that the person who owes the mortgage runs into financial difficulties and defaults on the mortgage, this insurance will ensure that the mortgage firm is able to recover all the outstanding principal of the mortgage, plus expenses, from the sale of the foreclosed property and the insurance.

Who would buy mortgage loan insurance? In Canada, when you borrow more than 80% of the value of your property from a federally licensed lender, regulations require you to also purchase mortgage loan insurance. This insurance protects the bank or lender against a possible default in payments, and is meant to ensure the stability of our Canadian financial system.

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Genworth Financial Canada, The Homeownership Company, works with lenders, mortgage brokers, real estate agents and builders to make homeownership more affordable and accessible throughout Canada. Genworth’s online resource, www.homeownership.ca, helps Canadians build their knowledge of the homebuying process and make their homeownership experience an informed and responsible one. Our intention is to educate and provide useful information to consumers, homeowners, future first-time homebuyers and governments. We believe it’s essential that Canadians have all the information they need to make informed decisions about homeownership, for many the most important investment of their lifetime. Additional information about Genworth Financial Canada is available at www.genworth.ca or through mortgage professionals.

Things to keep in mind

Consult our Online Quotes Overview for some considerations and caveats before purchasing insurance online.