When Mortgage Insurers say "No": What to do?

 
As a buyer, if you’ve ever heard the words
“We can’t insure that home due to its condition,” you know how stressful that moment can feel — especially when a purchase or refinance is on the line.

And if three insurers have already declined coverage?
It can feel like the deal is dead.

The good news?
There are some options.

In Ontario, there are still several proven paths forward — you just need to know where to look and how to structure the solution.

Why Homes Get Declined for Insurance

Insurers are very risk-focused. When they refuse coverage, it’s usually because of one (or more) of the following:

     • Old or unsafe wiring (knob & tube, aluminum)
     • Aging or damaged roof
     • Outdated plumbing (galvanized, poly-B)
     • Foundation issues
     • Old furnace or heating system
     • Vacant property
     • Oil tanks
     • Mold or moisture issues
     • Unpermitted renovations

From an insurer’s perspective, these are not cosmetic problems — they are risk issues.

But from a buyer or homeowner perspective, they’re often fixable.

Why This Becomes a Financing Problem

Most lenders in Ontario require:
- A valid home insurance policy
- Bound before closing

No insurance = no mortgage funding.

So when insurers say no, financing often stalls — unless you pivot to the right strategy.

The Real Options That Still Work

1) Specialty “High-Risk” Insurance (Short-Term Bridge)

There are insurers who specialize in difficult properties and temporary coverage while repairs are completed.

These policies:
     • Cost more
     • Are short-term (3–12 months)
     • Often require proof of repairs

But they allow the deal to close.

These are arranged through experienced insurance brokers who work with specialty underwriters.

2) Purchase + Improvement Mortgages

Many banks offer renovation mortgages that bundle repairs into the financing.

How it works:
     • The lender funds the purchase
     • Holds renovation money in trust
     • Buyer completes repairs
     • Home becomes insurable
     • Funds are released

This works very well for:
     • Roof replacement
     • Electrical upgrades
     • Furnace replacement
     • Foundation work

Once complete, the home can usually be insured normally.

3) Credit Unions (More Flexible Than Big Banks)

Ontario credit unions underwrite locally and are often more practical when a home needs work.

They can:
     • Accept specialty insurance
     • Accept renovation plans
     • Work with escrow holdbacks
     • Take a more common-sense approach

They are often the best bridge between private lending and major banks.

4) Short-Term Private Financing

When time is tight and closing is approaching, private lenders can step in temporarily.

This allows:
     • Purchase to close
     • Repairs to be completed
     • Refinancing into a traditional mortgage afterward

This is commonly used on older Oakville, Burlington and Toronto homes.

5) Negotiating With the Seller

Sometimes the simplest solution is:
     • Seller completes repairs
     • Seller agrees to a holdback
     • Or price is adjusted to reflect repair costs

Once repairs are done, insurance is often approved.

The Bottom Line

If insurers say no, it does not mean:
- The home is unsellable
- The deal is dead
- Financing is impossible

It simply means the file needs to be structured properly.

This happens all the time with older homes, estate properties, and renovation opportunities — especially in established neighbourhoods.

My Advice If You’re Facing This

- Don’t panic.
- Don’t walk away without exploring solutions.
- And don’t rely on just one lender or insurer.

There is almost always a path forward — it just requires the right team.

If you or someone you know is navigating an insurance or financing roadblock, I’m always happy to help map out options and connect you with the right professionals.

Sometimes a deal just needs a different approach.