The Great Mortgage Divide: How Some are Bridging the Insured-Uninsured Rate Gap

The difference between insured and uninsured mortgage rates is wider than a canyon nowadays.

That’s creating unusual scenarios where it’s actually cheaper for a #low-ratio# borrower to buy #transactional insurance# and get a default-insured mortgage than to pay a higher uninsured rate.

For the uninitiated, the lowest mortgage rates in Canada are typically insured rates, then insurable, then uninsurable—in that order. Transactional insurance is like a backstage pass to the world of low mortgage rates. By purchasing this insurance themselves, low-ratio applicants can thereby qualify for the cheapest interest cost.

Sometimes, it even makes sense for borrowers to pay for insurance themselves rather than get an insurable rate (where the lender buys the insurance).

It all depends on the circumstances, including:

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