When it comes to buying a home, making the best decisions for you and your family starts with understanding your options. As you already trust your money to a big bank, they may be the first place you turn for a mortgage. Big banks can be great partners but you have to understand the fine print! And that includes not only your mortgage, but your mortgage insurance options as well.
First and foremost, if you choose to go to a bank, remember that its staff represent that institution, and, no matter their job title, sell its products. That’s a fundamental part of their job. They may even have revenue goals, which they will want to meet by pushing you to a higher-rate or a longer-term product.
Just as significantly, comparing mortgage options can be very difficult. The mortgage offered by your bank may look good on paper, but may come with some financially disastrous restrictions in the fine print if you decide to switch things up.
For instance, you may well need to renegotiate your mortgage before the term is up—more than half of Canadians do.
And rather than making it clear from the outset of a mortgage what the penalty will be to renegotiate it, banks use obscure, hard-to-understand language or require you to find long-forgotten paperwork. For more on this, learn [Why Banks Push Five-year Rates.]
Mortgage life insurance
When buying a home and getting a mortgage, consider securing your mortgage with life insurance. Insuring your mortgage can be a sound investment for your peace of mind, and it may be required if you have a down payment of less than 20%. In addition, an insurance policy that covers your mortgage will ensure that you leave your family only what you choose to leave them, not your largest debt.
Here, just as with your mortgage, it’s important to shop around.
Mortgage life insurance from a particular institution is tied to that institution. This means that each bank sells only one product, no matter your circumstances or health. And your bank’s mortgage insurance is designed to protect the lender, not you, the purchaser. The beneficiary of a bank’s mortgage life insurance is the bank itself.
Not only that, but much of the information about mortgage insurance sold through your bank may not be clear. For example, if you decide to change lenders, you may have to resubmit your medical information and be re-evaluated. Or you could even be cut off entirely if you hit a pre-determined age.
Signing up for mortgage insurance at a bank involves filling out a large stack of complicated paperwork, for which you must provide a variety of medical and legal information. And when you submit this stack of paperwork, it is not looked over to ensure that all information has been filled out correctly—until a claim is filed, possibly years down the road. Without knowing it, you may provide information that the insurer can use against you.
Looking into insurance beyond what is offered by your bank is essential for your family’s future. There are options out there that are cheaper, flexible, and more secure in the long-term.
Consider a mortgage broker
Unlike a bank, a mortgage broker works for you, not a large institution. While banks take a one-size-fits-all approach, at SafeBridge, we work with you to find a life insurance product that suits your needs. Contact SafeBridge Financial to learn more about how we can help you.