Jamie is refinancing her primary residence in Calgary for $700,000. She currently has a mortgage of $350,000 with ABC Bank, insured by Sagen. She wants to move her mortgage to XYZ Credit Union and increase her mortgage to $500,000. What is a key consideration regarding mortgage default insurance in this scenario?

Question: Jamie is refinancing her primary residence in Calgary for $700,000. She currently has a mortgage of $350,000 with ABC Bank, insured by Sagen. She wants to move her mortgage to XYZ Credit Union and increase her mortgage to $500,000. What is a key consideration regarding mortgage default insurance in this scenario?

Answer options:

• The original Sagen insurance can be directly transferred and 'ported' to cover the new, increased mortgage amount at XYZ Credit Union.
• Sagen mortgage default insurance is not available for refinancing unless the loan-to-value ratio is below 65%. ✅ Jamie's mortgage will require a new mortgage default insurance application and approval, as it's a new lender and an increased amount.
• Refinancing a mortgage means that any existing mortgage default insurance automatically becomes null and void without any new application.

Correct answer: Jamie's mortgage will require a new mortgage default insurance application and approval, as it's a new lender and an increased amount.

Explanation: While 'portability' of mortgage insurance exists, it typically applies under specific conditions, often with the same insurer and sometimes requiring a new application and approval if the mortgage amount significantly increases or there's a new lender, as per CMHC/Sagen/Canada Guaranty portability guidelines. For refinancing and increasing the mortgage with a new lender, a new insurance application is generally required.