Can You Cancel Mortgage Insurance Later?
Learn when and how mortgage insurance may end, and what it means for your long-term costs
If you needed mortgage insurance when you first bought your home, you may be wondering whether you’re stuck with it forever. After all, it adds to your borrowing costs and monthly payments. The good news is that mortgage insurance may not be permanent, but the rules for cancelling it aren’t always straightforward.
This becomes especially important when your financial situation improves or your home’s value increases. Knowing whether and how you can cancel mortgage insurance helps you make more informed decisions about refinancing, renewing, or accelerating your payments.
Can You Cancel CMHC or Insured Mortgage Premiums?
In Canada, mortgage default insurance, typically provided by CMHC, Sagen, or Canada Guaranty, is paid once at the beginning of the mortgage. While you can’t cancel the insurance itself once it’s in place, you may avoid paying it again under certain conditions.
If you stay with the same lender, the insurance remains in place for the life of that mortgage. You won’t get a refund or cancellation. However, if you refinance or switch lenders, and your loan-to-value ratio is now under 80 percent, you may no longer need insurance for the new mortgage.
This is especially true if:
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Your home has appreciated in value
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You’ve paid down your principal significantly
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You now have more than 20 percent equity
Tip: Lenders may still request new insurance if you refinance with more than 80 percent loan-to-value, even if the original mortgage was insured.
What About Private Mortgage Insurance on Conventional Loans?
Some lenders may request insurance even for loans with larger down payments, especially in non-traditional situations. In those cases, insurance terms vary.
If you’re paying for a separate lender-required policy outside of CMHC or Sagen, ask your lender for the cancellation terms. In some cases, you may be able to request removal once you reach a specific equity threshold or pass a credit reassessment.
How Can You Reduce or Eliminate the Need for Mortgage Insurance?
If you’re early in your mortgage and want to avoid future insurance premiums during a refinance or renewal, there are several practical steps you can take:
| Strategy | How It Helps |
|---|---|
| Make lump-sum payments | Reduces your principal faster and increases your equity |
| Increase regular payments | Speeds up loan repayment, helping you pass the 20 percent threshold sooner |
| Track your home’s market value | Ensures you know when your equity surpasses 20 percent |
| Time your refinance strategically | Avoids triggering a new insurance premium if your equity is strong enough |
| Consult a mortgage advisor | Helps you structure your finances to minimize future insurance |
While you can’t get a refund for an insurance premium that was already paid, you may prevent future charges and reduce your overall borrowing costs.
Can Mortgage Insurance Ever Be Refunded?
In some rare cases, you might qualify for a partial refund if the mortgage is paid off very early, typically within the first year. Each insurer has its own refund rules, and most require that no claim has been made.
Check with your lender or insurer if:
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You paid off your mortgage early due to a sale
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You refinanced with another lender shortly after closing
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You believe the insurance was applied in error
However, refunds are limited and not guaranteed.
Why This Matters for Long-Term Planning
Mortgage insurance serves a purpose when you’re entering the housing market with a smaller down payment. But as your equity grows, it becomes less necessary and more of a cost to minimize or avoid in future financing decisions.
You might think about this the next time you renew your mortgage, consider a refinance, or track your progress toward full homeownership. By understanding how mortgage insurance works over time, you can plan more effectively for the long run and reduce your total cost of borrowing.