Give a Boost to Your Down Payment
The financial requirements for home ownership can be complex and demanding: down payments, credit ratings, changes in interest rates, calculation of monthly payments ... Fortunately, there are various mechanisms in place to help those who dream of becoming a homeowner. Mortgage loan insurance is one such mechanism and is offered by the Canada Mortgage and Housing Corporation (CMHC) and Genworth Canada.
A minimum down payment that can go from 20% to 5%
When a borrower wishes to purchase a home with a down payment of less than 20% of the purchase price, the lending institution usually requires mortgage loan insurance. This protects lenders against mortgage defaults and allows borrowers who only have a minimum 5% down payment to purchase a home and benefit from the same interest rates made to borrowers who have a 20% down payment.
As with any insurance, lenders have to pay a premium for mortgage loan insurance. Normally, your lender will require you to repay this premium. Your lender will tell you the exact amount when you submit a loan application.
How is the premium refunded?
The mortgage insurance premium is a percentage of the loan and is based on the size of the down payment. The higher the proportion is between the loan and the property price or value, the higher the percentage that will be used to calculate the premium.
Therefore, mortgage loan insurance can help you buy a home with a down payment of as little as 5% of the purchase price. It is available throughout Canada and can be applied to many different types of housing. For answers to your questions about this product, visit the CMHC or Genworth Canada website.