Posted On Nov 07, 2024
How to Save Thousands on Your High-Ratio Mortgage by Porting Your Mortgage Insurance
If you're buying a home with less than 20% down, you’ll likely need mortgage insurance, which protects lenders in case of default. This insurance is typically offered by providers like Genworth, CMHC, and Canada Guaranty, and its cost is a percentage of your mortgage amount. However, few buyers know about a powerful feature that could save them thousands: mortgage insurance portability.
What Is Mortgage Insurance Portability?
When you sell your home and buy a new one, you may be able to “port” (transfer) the mortgage insurance you paid for on your previous home to your new mortgage. This can significantly reduce or even eliminate the insurance premium you’d have to pay on your new property. Mortgage insurance portability allows buyers to reuse coverage they've already paid for, which can help offset the costs of moving to a more expensive home or making an upgrade.
Real-Life Example: Saving $10,000 by Porting Mortgage Insurance
In a recent case, our client was buying a more expensive home, and the new mortgage insurance premium was set to be around $19,000. However, by transferring the insurance from their previous home, we helped them save over $10,000 on the premium for their new mortgage! This approach not only lowered their upfront costs, but we also optimized their mortgage by shortening the amortization period from 25 years to 23.5 years, which will save an additional $6,000 in interest payments over time.
Why Most Buyers Don’t Know About This Feature
Mortgage insurance portability is often overlooked simply because not all mortgage professionals are aware of it. Some lenders or advisors may not inform clients about the option to transfer insurance, leaving buyers to pay thousands in unnecessary premiums. This is where a knowledgeable and up-to-date mortgage advisor can be invaluable.
The Value of Working with an Experienced Mortgage Professional
Mortgage regulations and options are continually evolving, and keeping up with industry trends can make a big difference in how much you save. A well-informed mortgage professional can help identify opportunities like insurance portability and provide guidance on loan terms to help you reach your financial goals.
Whether you’re a first-time buyer, looking to upgrade, or even downsizing, working with a trusted mortgage advisor can provide real savings and peace of mind. If you’re planning a move or considering a new mortgage, ask your advisor about the possibility of porting your mortgage insurance—you could save thousands!