A Canadian mortgage is generally a good means of buying a house or any form of property without paying for the full amount at once. This type of loan allows you to secure a specific commodity while you are paying for it on a regular basis. Hence, having a stable source of income such as a good job is important when you want to take out a mortgage. However, certain unforeseen situations may occur to anyone at any given time. What if you indeed have a steady source of funds to pay for the monthly mortgage costs, but suddenly you become incapable of working to earn your income? How are you going to pay your lender?

The aforementioned questions can be answered by a service known as a Canadian mortgage insurance. This is a kind of insurance that is used by your mortgage lender to reclaim a portion of his financial losses in an event where you fail to fully repay your loan. The amount of compensation that is given to your lender is determined by the terms and conditions made by the provider of the insurance. In a way, it also protects you from additional expenses by paying for your debts when you default on your mortgage. Furthermore, typical situations wherein a mortgage insurance takes effect include the death or disability of the insured person.

Moving on, with regard to the cost of a mortgage insurance, it is usually added into the loan payment you give your lender every month. In addition, a mortgage insurance is normally required when you make a down payment that is below 20 percent of the purchase price of the property you are acquiring. This however may vary depending on the lender.