Ever wondered why the interest rates banks advertise differ from the rates you’re offered? This stems from the three mortgage categories: Insured, Insurable, and Uninsured/Conventional, all related to default insurance.

• Insured Mortgages
• • Lowest rates as the borrower pays for default insurance.
  • Mandatory with <20% down payment.
  • Applicable to owner-occupied properties under $1,000,000.
  • Not for refinancing; purchases only.
  • Insurance Providers: CMHC, Sagen, Canada Guaranty.
  • Premium are included in the monthly mortgage payment.
  • Insurance transferable upon lender switch without refinancing.

• Insurable Mortgages
  • Lender-insured, no cost to the borrower.
  • Available on purchases ≤ $1,000,000 with ≥20% down.
  • Rates slightly higher than insured mortgages.
  • Only for new purchases or lender switches.
  • No monthly premium payments.
  • Mortgage stress-test applies.
  • Property must be owner-occupied.

• Uninsurable or Conventional Mortgages
  • Cannot be insured against default.
  • Applies to purchases ≥ $1,000,000 or those not meeting insured/insurable criteria.
  • Refinances are uninsurable.
  • Non-owner occupied properties.
  • Amortization over 25 years.
  • Mortgage amount or period increase in refinances.

Understanding these distinctions helps borrowers navigate mortgage options effectively and also lets you know what category you fall into with your current rate as well.