Buying a house is an overwhelming process, especially if it's your first home. I can say this from experience as I am currently going through the process myself.

I kept being told about all of the things I needed that I knew absolutely nothing about. But luckily there was one thing I already knew. That’s mortgage insurance!

If you're taking out a mortgage on a house, you should get mortgage insurance to go with it. In the event of your death, the mortgage insurance pays off the remaining mortgage, ensuring that your family or estate is not burdened with the debt.

There are two places that you can buy mortgage insurance from. Your lender (whoever's giving you the mortgage) or from a life insurance company (Us at Doyenne).

Most people don’t know the difference between the two, and this causes people to just go with their lenders insurance because they didn’t know there was another option.

I was talking to someone the other day and this conversation came up, he told me that he almost bought his lenders insurance but he took the time to do some light research and turned them down to seek out a life insurance company.

Don’t just take my word for it, try googling it for yourself! Or check out some of the articles I've linked below supporting this argument.

Some of the main differences are

Portability: Lender's Mortgage life insurance only applies to the same home under the same terms with the same lender. Personal life insurance can be used to cover any home with any mortgage lender or repayment terms.

Cost: Personal term life insurance usually costs less than lender's mortgage insurance, depending on the policy. It may require you to get a medical exam, but if you are healthy this will work in your favor and lower your premiums.

But the KEY difference is:

In my personal opinion, the most important reason why personal life insurance is the better choice is the amount of money that gets paid out and how it gets paid out. I'll explain this with a quick example.

Say you buy a house with a $500,000 mortgage

If over time, you pay down $300,000 of your mortgage (now there's only $200,00 remaining on your mortgage)

If you die, here's how it will play out with lenders mortgage insurance vs personal life insurance

Mortgage insurance:

Since there's $200,000 remaining on your mortgage, your insurance policy will pay $200,000 directly to your lender. Your mortgage will be taken care of, but that’s all.

Personal life insurance:

Even though there's only $200,000 remaining on your mortgage, your insurance policy will pay out $500,000 directly to your beneficiary. This $500,000 can be used to pay off the remaining portion of your mortgage while giving your loved one the remaining $300,000 tax free.

Hopefully I've convinced you that getting mortgage insurance through a life insurance company is the right way to go. It is an extra step, but it's worth it.

Sources:

https://globalnews.ca/news/3488311/mortgage-life-insurance-canada/

https://www.untangle.money/post/untangle-the-finances-behind-your-rent-vs-buy-decision

https://www.sunlife.ca/en/insurance/life/mortgage-insurance-vs-life-insurance/

https://www.canadalife.com/insurance/life-insurance/mortgage-insurance-vs-life-insurance.html

https://www.dundaslife.com/blog/mortgage-life-insurance-mandatory#:~:text=Mortgage%20life%20insurance%20isn't,However%2C%20it's%20highly%20recommended.