Is mortgage insurance the best option? Protect yourself, not the bank

If you are a homeowner, you have experienced the mortgage insurance discussion with your banker. If your down payment is less than 20% of the home’s purchase price, then the insurance becomes mandatory. If not, there are many better options.

Mark and Sarah, a couple in their mid-30s, are contemplating purchasing a two-bedroom townhouse. After renting a one-bedroom for a few years and some disciplined saving, they have a 25% down payment of $212,000. When meeting with the mortgage specialist at their bank, he suggested adding mortgage insurance in case they couldn’t make the payments. It sounded like a good idea, but let’s take a closer look.

When your lender offers you mortgage insurance, what your lender is really asking you to do is protect their company. The coverage is designed as creditor protection, and the benefits would be used to pay off any remaining mortgage balance, regardless of other needs you may have. With a Synergy® policy, if something were to happen to Mark or Sarah, they would be able to determine how to best use the proceeds of the policy. With this strategy, they are not giving their lender the ability to determine how to use the money.

Synergy® – greater flexibility than mortgage insurance

Unlike traditional mortgage insurance, which primarily protects the lender, Synergy is designed with Mark and Sarah in mind, offering greater flexibility and complete control over their coverage. Synergy is a 3-in-1 plan that covers life, critical illness or disability, all under one plan. They can choose from $100,000 to $500,000—this becomes their pool of funds. If life takes an unexpected turn, the benefit is paid out from that pool.

Synergy® puts Mark and Sarah in the driver’s seat

If something were to happen to either of them, they can now decide how to best use the proceeds of the policy rather than giving the bank the ability to determine how to use their money. Lastly, Synergy® policies are also great for topping up a group plan, which often has maximum eligibility limits.

If you like the idea of protecting yourself and not the bank, contact me to learn more.