Sagen is one of 3 mortgage default insurance companies available to Canadians. The other 2 companies that provide mortgage default insurance are Canada Guaranty and CMHC.
Sagen insurance provides mortgage lenders with mortgage default insurance allowing them to fund a mortgage with as little as 5% down payment.
Without this insurance protection, the banks would never take on that much risk and you’d need a 20% down payment to purchase a home.
The long and short of it is – If your down payment is less than 20% of the purchase price, you will have to pay a mortgage insurance premium. The Sagen fee that you pay is based on a sliding scale.
Example : If you purchase a home for $500,000 with a down payment of $50,000, from the table above your insurance premium would be 3.1% of amount borrowed. Your Sagen fee would be: $450,000 x .031 = $13,950
The cost of your Sagen fee ($13,950 in the above example) would then be added to your mortgage amount to give you a total mortgage amount of $463,950. Your mortgage payments are now based on a mortgage amount of $463,950.