Canada Guaranty Mortgage Insurance Company Review 2024
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Struggling to gather a 20% down payment for your dream home? Well, default insurance can help you buy your home with a down payment of as little as 5%.
Canada Guaranty Mortgage Insurance Company is one of only 3 insurance providers in Canada offering mortgage default insurance. But what exactly is mortgage default insurance? How does it work? Let's find out.
This article is a comprehensive guide to Canada Guaranty Mortgage Insurance Company. It explains its offers, costs, and how you can get up to 25% discount on premiums.
Canada Guaranty: 4 Key Takeaways
- They provide government-mandated mortgage default insurance
- Provide multiple mortgage default insurance solutions catering to unique circumstances
- Can help facilitate a discount of up to 25% on mortgage loan insurance premiums
- Canada Guaranty Mortgage Insurance Company has a portable solution for mortgage loans
Our Canada Guaranty Mortgage Insurance Company review: Reliable and flexible
Canada Guaranty Mortgage Insurance Company is Canada’s leading private mortgage loan insurer. Since April 16, 2010, Canada Guaranty has been 100% Canadian-owned and is fostering a competitive mortgage loan insurance market by offering more choices within the mortgage insurance space.
It offers a comprehensive suite of products tailored for diverse homebuyer needs, from first-time purchasers to those new to Canada. Its standout feature includes the potential for up to 25% discounts on mortgage insurance premiums through the Energy-Efficient Advantage program, making it an appealing choice for environmentally conscious buyers and those undertaking green renovations.
Best suited for individuals seeking flexibility and savings in their mortgage insurance, Canada Guaranty caters to a range of scenarios, including those with smaller down payments and self-employed individuals. With its strong commitment to customer service and a broad array of plans, Canada Guaranty is an excellent option for Canadians navigating the homebuying process.
You are not insured by Canada Guaranty Mortgage Insurance
Canada Guaranty Mortgage Insurance Company does not cover you, the borrower. Despite you paying the premiums, It is a specific insurance product that insures the lender of your mortgage and will provide them with payment if you default on your loan and you may still lose your home.
If you are looking for private mortgage insurance that will cover you, then look no further. HelloSafe’s comparison tool below compares all the best mortgage insurance providers in Canada and can help you get instant quotes.
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Pros of Canada Guaranty Mortgage Insurance Company
- Offers mortgage default insurance to individuals who are only able to pay a minimal deposit on purchase of property
- Provide multiple solutions for all home buyers from newly immigrated to self-employed
- Mortgage default insurance ensures market stability and accessible home ownership
- Fixed mortgage loan insurance based on fixed premium rates
- Offer mortgage default insurance premium discounts for eligible homes
- Have a portability option when moving within the first 24 months
Cons of Canada Guaranty Mortgage Insurance Company
- Adds extra closing costs to home buyers with minimal cash availability
- Deferred premium payments accrue interest
- Non-refundable premiums
- Coverage is only provided to the lender and not the borrower
What is Canada Guaranty Mortgage Insurance Company?
Canada Guaranty Mortgage Insurance Company is one of only three insurance providers in Canada that offers mortgage default insurance. The other two providers are Canada Mortgage Housing Corporation (CMHC) and Sagen Insurance (formerly known as Genworth).
Together, these three companies insure all lenders who offer mortgages to home buyers who cannot afford to put more than 20% down towards payment on a property.
As a provider of government-mandated insurance, Canada Guaranty Mortgage Insurance Company has to provide extremely similar, if not the same, mortgage default insurance as its two competitors at the same prices.
The only difference between Canada Guaranty Mortgage Insurance Company and CMHC or Sagen is how they approach customer service and after-sales care.
Since mortgage loan insurance is organized by your lender, you will usually not have a choice as to which provider you get. While this may seem like a bit of a shame, the result doesn’t matter as the provider is there to protect the lender if you default on your insurance, and not you, the borrower.
As such, it would be your mortgage provider that submits an insurance claim and would have to deal with the insurer if you can’t make your mortgage payments.
How does Canada Guaranty Mortgage Insurance Company insurance work?
Canada Guaranty mortgage loan insurance works by insuring the financial loans provided by lenders to borrowers. If a borrower defaults on their mortgage, the lender can submit a claim against the mortgage loan insurance to recoup some of their losses.
This extra layer of protection for lenders means that they can provide reasonable rates to home buyers who only have a small down payment available, which increases housing market accessibility and stabilizes loan rates.
Of course, since mortgage default insurance is a requirement for anyone looking to purchase a property with less than a 20% down payment, certain rules must be followed.
These regulations include:
- The borrower must have a minimum down payment of 5% of the property purchase price up to a value of $500,000
- For properties valued between $500,000 and $999,999, a minimum 5% down payment is required on the first $500,000 of the property value, and a minimum 10% down payment on any amount exceeding this value
- The borrower cannot purchase a property valued over $1,000,000
Buying a $600,000 Property
Considering the rules outlined above if you’re looking to purchase a property valued at $600,000, the minimum down payment you have to make is $35,000.
This is calculated as 5% on the first $500,000 of the property valuation, plus 10% on the remaining $100,000. ($500,000 x 5%) + ($100,000 x 10%) = $25,000 + $10,000 = $35,000.
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What does Canada Guaranty mortgage insurance cost in 2024?
Canada Guaranty mortgage loan insurance costs are transparent and straightforward. The premium rates that are applied to your insurance policy are based on the loan-to-value (LTV) ratio of your mortgage and are applied directly to the outstanding balance of your mortgage.
Canada Guaranty mortgage insurance premium rates range from 0.60% to 4% depending on the LTV, as can be seen in the table below.
| Loan-to-value (LTV) | Canada Guaranty mortgage insurance premium rates |
|---|---|
| <65% | 0.60% |
| 65% - 75% | 1.70% |
| 75% - 80% | 2.40% |
| 80% - 85% | 2.80% |
| 85% - 90% | 3.10% |
| 90% - 95% | 4.00% |
Example of a Mortgage Loan Insurance Premium Calculation
Using the previous example of purchasing a house valued at $600,000 with a minimum downpayment of $35,000, the borrower would have to take out a $565,000 loan from a lender. In this instance, the loan-to-value ratio would equal 94.2% and the borrower's mortgage loan insurance premium rate would be 4%.
The premium rate, 4%, is then applied to the outstanding balance of the mortgage, $565,000, meaning that the Canada Guaranty mortgage premium would be $22,600.
What are the advantages of Canada Guaranty mortgage insurance?
One of the advantages of having Canada Guaranty Mortgage Insurance Company as your default insurance provider is their customer service. While limited, online reviews consistently reinforce a well-managed company that takes care of its staff and clientele.
Canada Guaranty Mortgage Insurance Company also has a very strong DBRS financial rating of AA, meaning the company has superior credit quality.
Lastly, Canada Guaranty has several different mortgage loan products, targeting different individuals and their unique circumstances.
Canada Guaranty mortgage loan products
The table below highlights Canada Guaranty’s mortgage loan products along with their target individual and purpose.
| Canada Guaranty mortgage insurance products | Specific Canada Guaranty product coverage |
|---|---|
| Downpayment Advantage | Allows home buyers to purchase property with as little as a 5% down payment. |
| Flex 95 Advantage (Borrowed Down Payment) | Canada Guaranty’s Maple Leaf Advantage program offers immigrants an opportunity to buy a property with a limited down payment. |
| Lifestyle Advantage (Second Home) | This program allows borrowers to purchase a second home with as little as a 5% down payment if they have a good credit history. |
| Low Doc Advantage (Self-Employed) | Perfect for self-employed borrowers with a good credit score to get a mortgage through a simplified process, despite maybe having limited documentation. |
| Maple Leaf Advantage (New to Canada) | Canada Guaranty’s Maple Leaf Advantage program offers immigrants an opportunity to buy property with a limited down payment. |
| Progress Draw Advantage | This product has been designed to provide an option for borrowers who are either making major renovations to existing property or building a new home. Progress Draw Advantage is available for both contractor-built and self-built projects. |
| Purchase Advantage Plus | The product is an option for borrowers wanting to make significant improvements to their homes and include the costs within the mortgage. |
| Rental Advantage | The Rental Advantage product gives certain individuals the ability to buy investment properties with a minimum 20% down payment. |
Good to know
Mortgage loan insurance is required for high-ratio mortgages — those with less than a 20% down payment. But you only need coverage from one insurer, not multiple.
Can I take Canada Guaranty mortgage insurance with me if I move?
Yes, Canada Guaranty Mortgage Insurance Company offers clients the Borrower Loyalty Credit through their Portable Advantage program. This allows current Canada Guaranty mortgage insurance holders the ability to receive premium credit if they want to move their mortgage to a new property within 24 months of mortgage issuance.
The amount of the premium credit available to current borrowers is determined on the time passed since the original closing date, and is as follows:
- 0-6 months, 100% credit
- 6-12 months, 50% credit
- 12-24 months, 25% credit
Additional stipulations will also apply for borrowers to qualify for the Borrower Loyalty Credit. These include:
- Having the original mortgage insurance signed with Canada guaranty
- The mortgage holder has to undergo requalification
- The mortgage has been paid satisfactorily for 6 months
- If additional borrowers are to be added to the insurance, at least one of them would have to have been listed as the borrower on the original mortgage
Canada Guaranty mortgage insurance is non-refundable
While you may be able to port your current Canada Guaranty mortgage insurance to a new property and receive some form of credit toward your next insurance, it is important to note that you will never qualify for a refund.
Before you go, ensure you're making the best choice for your mortgage insurance needs. Use HelloSafe’s free comparison tool to easily compare and get free quotes from the best mortgage life insurance providers in Canada.
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Can I get a discount on mortgage loan insurance?
Yes. Borrowers may be able to get discounts on Canada Guaranty mortgage insurance up to 25% through the Energy-Efficient Advantage program. This program aims to promote environmentally friendly building practices and home buyers, builders or renovators may qualify for the discount if they purchase an energy-efficient property, or make energy-efficient upgrades.
