24 years old, first time living on his own… and the mortgage insurance in all that?

24 years old, first home of your own… and what about mortgage insurance?

You’re 24, planning your first home in Quebec, and your bank talks about “mortgage insurance”? Between premiums, CMHC (SCHL) and life insurance, it can all quickly get confusing. Here is the essential guidance to make smart choices without blowing your budget.

1. Mortgage loan insurance (CMHC, Sagen…): mandatory or not?

If you put less than 20% down, your loan is “high-ratio.” In this case, your lender must obtain mortgage loan insurance from CMHC, Sagen, or Canada Guaranty.

• It protects the lender, not you.
• It still allows a young couple to buy with only 5% down.
• The premium (a percentage of the loan) is added to your mortgage and amortized over 25 years.

In practice, this insurance opens the door to ownership sooner, but at the cost of a slightly higher loan.

2. Mortgage loan insurance vs life insurance linked to the mortgage: don’t confuse them

Another product often offered at the bank: life or disability insurance tied to the mortgage.

This is different from CMHC mortgage loan insurance.

• It is intended to pay off the remaining mortgage balance if you die or become disabled.
• It protects you and your family, not the bank.

You are never obligated to take the insurance sold by the bank. You can often obtain a stand-alone life insurance policy that is more flexible, sometimes cheaper, from an advisor.

3. How can a young couple protect themselves effectively?

A few simple guidelines:

• Calculate: if one of you dies, can the other realistically afford the payments alone?
• Prioritize income protection (disability, sickness insurance): this is the most likely event at 24.
• Compare vs (broker or advisor). Individual is often:
• more portable (you keep it if you change banks);
• better suited to your family plans.

4. Common mistakes to avoid

• Believing CMHC will “pay for the house” in case of death. False.
• Saying yes to bank insurance without asking questions.
• Underestimating other costs (taxes, maintenance) by focusing everything on the down payment.

Conclusion: a tool, not a trap

The mortgage loan insurance is a tool to enter the market faster; life/disability insurance is a shield for your partnership. Take the time to compare, do your calculations… and align your protections with what truly matters: keeping your home, even if life goes off track.