Distributing the Risk: Mortgage Default Insurance

Mortgage Default Insurance (MDI) is mandatory in Canada for residential purchases where the purchaser’s down payment is between 5% and 19.99%.[i] Most MDI premiums fall in the range between 2.4% to 6.6% of the mortgage amount. The idea behind MDI is to increase the protection of lenders in the event that a borrower defaults on their mortgage, that is, fails to make the outstanding payments. Countries that have adopted MDI in the housing market increase home buyers access to the real estate market, simply by distributing the risk … READ MORE