Mortgage default insurance, commonly referred to as mortgage insurance, allows borrowers to achieve home ownership in Canada with as little as 5% down.
In other words, mortgage insurance is an insurance policy that the bank takes out to protect themselves against your defaulting on the loan. They pass the costs on to you, typically it is added to the mortgage balance and included in your regular payments. Keep in that there is 8% PST on the mortgage insurance premium that cannot be added to the mortgage amount and it becomes part of your closing costs.
Here is the transcript some from the video:
A conventional mortgage in Canada normally requires a down payment of at least 20% of the purchase price. When homebuyers have less than 20% for a down payment, Mortgage Insurance allows them to secure a mortgage for their home purchase. Tailored Mortgage Insurance products from Genworth Canada can help you achieve the dream of homeownership sooner and with as little as 5% down. Saving for a down payment is always a great idea. Trouble is, depending on the area, prices may be rising faster than the savings are building up. And, as values rise, the dream home gets further out of reach. This is where mortgage default insurance – more commonly referred to as “mortgage insurance” – can help…by enabling qualified borrowers to purchase a home with as little as a five per cent down payment. If the right home for you has a purchase price of $300K, then lenders will normally require you to provide a down payment of at least $60K. With Mortgage Insurance, you can secure a mortgage with as little as $15K down. Mortgage insurance is a win-win situation for homebuyers and lenders. Lenders rely on it to protect themselves from financial losses in case a loan is not repaid. Because lenders have this protection, they are able to offer loans with smaller down payments, provided credit and legal requirements are met. For homebuyers, this means access to homeownership sooner at a competitive rate, and with a lower down payment.
It is important to note that mortgage insurance premiums will be going up as of June 01, 2015 : the premiums charged for high ratio mortgage insurance is increasing for those borrowers with less than 10% down. The new premium will be 3.60% of the mortgage amount, up from 3.15% previously charged. Any purchasers who have an accepted offer and receive approval from one of the insurers prior to June 1st, 2015 will receive the old, lower premium on their mortgage.
Let me know if you have any questions or if you need help obtaining a mortgage pre-approval. You can reach me directly at 647-893-2535 or [email protected] Sign Up Here for Monthly Mortgage Updates
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