Are you dreaming of owning your own home but feeling overwhelmed by the financial hurdles? Fear not! Mortgage insurance might just be your answer. But, is Mortgage Insurance truly the fastest path to homeownership? Let’s explore Canada’s top mortgage insurers to uncover whether they might be able to help you step onto the property ladder.
Mortgage Insurance Options
Meet the Big Three: CMHC, Sagen, and Canada Guaranty. These powerhouses are the unsung heroes of the Canadian housing market, making homeownership possible for thousands of Canadians every year. But what sets them apart? CMHC, the government’s own insurance corporation, brings stability and a broader housing vision to the table. It’s like having a wise old uncle backing your mortgage. On the other hand, Sagen and Canada Guaranty, the dynamic private duo, offer a dash of flexibility that might just tip the scales in your favor.
Which Option is Best For Your Situation?
Imagine you’re self-employed or eyeing an investment property. While CMHC might raise an eyebrow, Sagen and Canada Guaranty could be nodding along, ready to help you make it happen. They’re the cool cousins who understand that not every financial journey follows the same path.
But here’s the kicker – all three offer nearly identical premium rates for typical mortgages. It’s like they’re in a secret club, agreeing to keep things fair for us mere mortals. And with the government backing these insurers (fully for CMHC and 90% for the others), you can sleep easy knowing your mortgage is in safe hands.
Key Features and Differences Between the 3 Mortgage Insurers
Below is a table summarizing the key features and differences of CMHC, Sagen (formerly Genworth Capital), and Canada Guaranty.
| Feature | CMHC | Sagen | Canada Guaranty |
|---|---|---|---|
| Ownership | Crown Corporation | Private company | Private company |
| Market Share (2022) | ~33% | 37% | ~30% |
| Standard Premium Rates | Same as others | Same as others | Same as others |
| 30-Year Amortization Premium | +20 bps | +20 bps | +20 bps (expected) |
| Self-Employed Mortgages | Limited options | More flexible | More flexible |
| Second Mortgages | Not offered | Offered | Offered |
| Investment Properties | Limited options | More options | More options |
| Borrowed Down Payment | Not allowed | Allowed | Allowed |
| Government Backing | Full | Partial (90%) | Partial (90%) |
| Focus | Broader housing policy | Primarily insurance | Primarily insurance |
Key features and differences:
- Ownership and Government Backing:
CMHC is a Crown Corporation with full government backing, while Sagen and Canada Guaranty are private companies with 90% government backing. This means CMHC may have slightly more stability, but all three are considered very secure. - Market Share:
As of 2022, Sagen has the largest market share at 37%, followed by CMHC and Canada Guaranty. This indicates strong competition in the market. - Premium Rates:
All three insurers offer the same standard premium rates for typical mortgages. Recently, they’ve all aligned on offering a 20 basis point surcharge for 30-year amortizations on insured mortgages for first-time homebuyers of new construction. - Flexibility:
Sagen and Canada Guaranty tend to offer more flexible options for self-employed borrowers, second mortgages, and investment properties. They also allow borrowed down payments in some cases, which CMHC does not. - Focus:
CMHC has a broader mandate related to housing policy in Canada, while Sagen and Canada Guaranty focus primarily on mortgage insurance. - Product Innovation:
Private insurers like Sagen and Canada Guaranty often lead in product innovation, offering more niche products to cater to various borrower needs. - Approval Process:
While all three use similar criteria, there can be slight differences in how they assess risk, which might affect approval chances for borderline cases.
In practice, most borrowers won’t notice significant differences between these insurers, as lenders often choose which insurer to use. However, for more complex cases or specific needs (like self-employed borrowers), the differences in flexibility and product offerings can become more important. As the core offerings are quite similar, mortgage seekers should choose the best option for their particular situation. Like you would with regular mortgage due diligence, find out what fees you’ll be paying for each and if there are any early payout penalties associated.
In Sum
Whether you’re a first-time buyer, a savvy investor, or somewhere in between, there’s a mortgage insurer out there ready to be your financial wingman. They’re not just opening doors; they’re helping you build your future, one brick at a time. So why wait? Your perfect home – and the right mortgage insurance – could be just around the corner!
If you’re looking for more tips, Download my Free eBook: The Savvy Woman’s Blueprint to Real Estate Investing.
