The mortgage you choose will form the foundation for your financial stability. Here are some tips to help you get started.
CONVENTIONAL: Regulations under The Bank Act prohibit Bank, Trust and Insurance Companies from lending in excess of 75% of the purchase price or the appraised value of a property without obtaining Mortgage Loan (High Ratio) insurance. A loan for up to 75% of the purchase price of a property is a conventional mortgage.
HIGH RATIO: A loan for 75.1% to 95% of the purchase price of a property.
MORTGAGE LOAN INSURANCE (HIGH RATIO): High ratio mortgages must be insured through CMHC (Canada Mortgage and Housing Corporation) or GEMI (GE Capital Mortgage Insurance Canada). CMHC and GEMI provide default or high ratio insurance to the lenders protecting them against the risk of lending to homebuyers who have less than 25% downpayment available. An insurance premium is paid by the borrower on behalf of the lender. The insurance premium that is paid by CMHC or GEMI is to protect the lender in the event that the mortgage is not paid. This is not to be confused with life, disability, or job loss insurance.
The insurance premium is calculated as a percentage of the mortgage amount, depending on the loan value, and may be added to the mortgage amount. The premiums are as follows:
LOAN TO VALUE
PREMIUM
75.1 - 80%
1.00%
80.1 - 85%
1.75%
85.1 - 90%
2.00%
90.1 - 95%
3.25%
Other high ratio financing costs include an application fee of $165 to $185, which includes an appraisal (PST applicable).
Mortgage Money Sources There is a wide range of financial institutions that are involved in the mortgage industry in Canada. Some of these include:
Copyright 2003. Michael A. Reis, Coldwell Banker Platinum Realty, Canada. All Coldwell Banker offices are independently owned and operated. Powered by Look Communications Inc. and compiled by The Corporate Ninja.
The mortgage you choose will form the foundation for your financial stability. Here are some tips to help you get started.