An insurable mortgage in Canada meets these criteria:
Down payment of 20% or more (loan-to-value ratio of 80% or less).
Purchase price under $1 million.
Amortization period of 25 years or less.
Owner-occupied residence.
Meets CMHC requirements, like minimum credit score and debt service ratios.
Key points:
Lenders can choose to insure it, but insurance isn't mandatory.
The lender pays the insurance premium, not the borrower.
Interest rates are slightly higher than insured mortgages but lower than uninsured ones.
Allows lenders to securitize the mortgage, leading to potentially better rates for borrowers.
Insurable mortgages offer a balance between the lower risk of insured mortgages and the higher interest rates of uninsurable ones, giving lenders the option to reduce their risk and offer competitive rates.
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