CWB Financial Group

Mortgage loan insurance

Understand what it is and why it's necessary

Canadian Western Bank (CWB) and its partner companies are required to protect themselves from borrowers defaulting on mortgages. Read the full details below to understand coverage details and what they mean for you.

Mortgage loan insurance (also referred to as default insurance) protects lenders such as CWB and Canadian Western Trust (CWT) from loss due to a borrower defaulting on a mortgage. Banking laws require default insurance when the down payment is smaller than 20% of the lesser of the purchase price or the appraised value of the property. Even when down payments are 20% or larger, lenders may still require default insurance due to individual borrowing circumstances, such as property location or property type.

The borrower pays the default insurance premium. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

How do consumers benefit?

Consumers can become home owners sooner. Default insurance enables consumers to borrow from us to purchase homes with a down payment as low as 5%, at interest rates comparable to mortgages with a 20% down payment.

How do CWB and CWT benefit?

Default insurance helps to protect CWB and CWT against loss as a result of a mortgage default, and allows us to offer mortgages with down payments of less than 20%. This insurance reduces the risk of loss, allowing us to offer borrowers (like you) mortgages at much lower interest rates and with smaller down payments than would otherwise be required. CWB and CWT receive no payments or benefits other than payment received by us in respect of a claim made by us under the default insurance.

Default insurance is calculated as a percentage of the mortgage amount and is based on the size of the down payment and the amortization period. Other factors can also influence the cost.

For additional information about mortgage default insurance rates please contact the branch or office where you do business, or visit these websites: