There are several types of insurance that may be required or helpful as part of arranging a mortgage. If you are applying for a high-ratio mortgage, you will have to pay for Mortgage Insurance, which protects the lender against default.
You should also consider purchasing Mortgage Life Insurance, a form of term life insurance that pays off the balance owing on your mortgage if you or your co-borrower dies. Many lenders offer you the option of buying this insurance and adding the cost to your monthly payments. You may also want to talk to your insurance agent and compare the costs of obtaining your own independent policy.
With a High-ratio mortgage, you are borrowing more than the usual 75 per cent. In this situation, the government requires that the mortgage be insured against default, and that you, the buyer, pay the cost of the insurance. That cost can range from one to three per cent of the mortgage amount, and is added to the mortgage principle.
What is Title Insurance?
Title Insurance is an insurance policy that provides coverage for title-related risks associated with real estate transactions. It is designed to cover the unpredictable or undetectable issues such as fraud, forgery, missing heirs, etc. that can affect rights of ownership. A title insurance policy removes the risk associated with the title from you, the buyer, lending institution, or lawyer to the title insurer.
What Does a Title Insurance Policy Contain?
- Risks or losses the policy will cover
- Risks or losses the policy will not cover
- General terms governing the insurance coverage
What Can Title Insurance Do For You the Purchaser?
Below you will find 3 examples of insurance coverage and the claims paid:
- Survey – These policies typically update a survey (no matter what the age) and can even cover situations where no survey is available for the property. A new survey can cost between $800 and $2,500.
- Building Permit/Building Code Standards – When buyers moved into their home, they received an Order to Comply from the municipality. The order advised the buyers that the deck had been constructed without a proper building permit, and the municipality required the deck meet building code requirements. The title insurance company paid the costs for the building permit and to bring the deck up to the building code standards.
- Encroachment onto Someone Else’s Land – After moving into their home, the buyers were notified that part of their driveway was over land owned by the Ministry of Natural Resources. This encroachment had to come to an end or the buyers had to buy the strip of land from the Ministry. The Title Insurance Company paid the cost of a survey and paid for the cost to purchase the strip of land.
Homeowner insurance policies cover the building and its contents for
“direct loss” or damage caused by insured perils, which may be stated individually or merely described as “all risks.” Personal liability insurance is usually also included. The “liability” component of home insurance is discussed as your liability to others.
Not all home insurance policies are created equal, nor are they priced the same. When buying a new policy or renewing a current one, you may wish to obtain quotations from a variety of insurance company agents and independent brokers.
Insurance coverage on your home should begin as soon as you become the legal owner – even if the home is still under construction (the policy can also cover related building materials on or adjacent to your property). If you’re about to move to a new home, ask your broker or agent if your current policy will cover the contents of both the old and new locations, and in transit, too. Theft insurance applies only when a building is ready for occupancy. Vacant buildings are not normally insured for more than 30 days.
Condominiums are covered by two different types of insurance policies:
- The policy you purchase to cover your unit and its contents
- A master policy held by the Corporation to cover the common areas (be sure your unitâ€™s policy includes everything not covered by the master policy, particularly as it relates to public liability)