When I bought my condo, because I could only put down 10%, so I had to pay CMHC (Canada Mortgage Housing Corporation) insurance premium (about 12 000 dollars I believe but I could be completely wrong here.)

Now what exactly is this insurance payment for? i.e what do I get in exchange for what I pay. From what I understand, this is more for the protection of the lender in case I default.

Also at the end of the 5 yr term, when I re new the mortgage, do i need to pay additional money for the insurance? Unlike other insurances, this one does not seem like it is a monthly payment.

  • 2
    From cmhc-schl.gc.ca/en/co/moloin/faq_006.cfm : "By protecting lenders against borrower default, CMHC Mortgage Loan Insurance creates an opportunity for Canadians to realize their dreams of homeownership." – JB King Jan 26 '14 at 0:28
  • I assume you mean $200/mo for the 5 years, correct? Not a lump sum $12K? At mortgage renewal time, what will your loan to value be? Will you be a the required 80%? – JTP - Apologise to Monica Jan 26 '14 at 14:39

Your CHMC insurance is payable to the lender not to you if you default. So technically you get nothing from it. However the likelihood is that you could not have got this loan, or got it only at an extremely high interest rate, without this insurance.

The Canadian government has a page on CHMC, including a link to a page called "What's in it for you?".

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