Buying a home in Vancouver
can be an expensive and daunting venture. To ease some of the pressure requires the proper tools and understanding of how to protect yourself, your family and your biggest asset, your home.
Insurance although not required in BC, is highly recommended when purchasing a home. The following is a brief description of the different types of insurance you may want to consider, when buying a home in Vancouver.
Life insurance depending on your plan covers the mortgage debt in the instance that the borrower (person who’s name the mortgage is in)
dies or is unable to earn money because of injury. In this instance the policy covers the monthly payments so the lender does not have to repossess the property. In some cases it may be required by the lender because of age or poor health.
Mortgage loan insurance
In British Columbia, when a homebuyer
makes a down payment of less than 20%, mortgage loan insurance is required by the lender. Mortgage loan insurance protects the lender against mortgage default and allows homebuyers to purchase a home with as little as 5% down. This type of insurance allows homebuyers the luxury of getting the same interests rates as someone who is making a 20% down payment. There is a premium applied that is approximately 3% of the purchase price of a home. It can be paid in one lump sum or added to your mortgage and included in your monthly payments.
Mortgage Life Insurance
Mortgage life insurance covers the home owner in the case of financial default, loss of job, business bankruptcy or any other reason that may stop the borrower from paying the mortgage.
Title Insurance protects your ownership against losses sustained as a result of hidden issues related to the legal ownership of the property.
It covers the title deed from a fraudulent sale on the part of the seller, or any other claim or lien that could mean that the house is not rightfully owned by the seller. In British Columbia this is mandatory at closing time. You will pay a premium which covers the insurance as well as the search in real estate records to establish that the seller is the legal owner of the property.
This insurance protects you, the new owner of the property and the lender as well. Should the house catch fire, or be affected by landslide, flood or any other ‘act of God’, the property insurance covers the cost of the house, although they will usually pay no more than the mortgage debt outstanding.
Cost Vs Risk
All of these insurance types are applicable and recommended. However, their affordability may be the deciding factor. But knowing you have the security can give you peace of mind as long as you own your home.