13 May MPP, is it for me?
So what is mortgage insurance? Mortgage insurance is a monthly payment that’s designed to pay off your mortgage if, god forbid, you get injured and can no longer work, or…die. There are multiple forms of mortgage insurance, but lets just talk about the main two.
1. MPP – Mortgage Protection Plan
2. Life insurance
During the mortgage process, by FICOM regulations a Broker must offer you MPP, but I suggest that you weigh your options and speak with a Life Insurance representative. This way you have a greater understanding of what’s out there, and what works best for you.
MPP and Life Insurance work 2 different ways, but all you have to know is that MPP will pay off the “remaining” amount left on your mortgage, whereas life insurance will cover you for the purchase price of the home. For example, if you were to buy a home for $1,00,000, sign up for MPP, and 20 years later you died owing $20,000 left on your mortgage, MPP would cut a cheque for $20,000 and give it to the mortgage lender. Done and done. I don’t know about you, but I’d want a cheque for $1,000,000 to be given to my partner, they could pay off the $20,000 left on the mortgage, and use the other $980,000 to take care of whatever’s necessary. Also, MPP is also not transferrable, which means as soon as you move properties the premium is lost and you will have to re-qualify.
The only circumstance where life insurance may not be your best option is if for some reason you cannot be approved for life insurance or the rate is too high because of your current physical status.
I suggest weighing the options and speaking with a life insurance agent before signing up for MPP. I’ve got one of the best in the business on my team, and I’d be more than happy to pass along his name.
Have a great week,