Greater Savings with a Larger Down Payment

The size of a down payment can vary. Depending on the type of mortgage, down payments generally range from 5% to 20% of the purchase price.

 

To obtain a conventional mortgage, home buyers are required to put down at least 20% of the purchase price or appraised value (whichever is less) as a down payment. If you don't have the necessary time or resources to save a full 20% down payment, you can choose a high-ratio mortgage and buy a home with a down payment of as little as 5%. This option is called a high-ratio mortgage and it requires you to purchase default insurance.

 

Whether you choose a conventional or a high-ratio mortgage, one thing is almost always certain: the larger your down payment, the more you save in the long run.

Want more information? Visit the Canada Customs and Revenue Agency Publication.

 

A larger down payment...

  • Reduces the amount of your monthly principal and interest payment
  • Reduces the total amount of interest you pay over the life of your mortgage

 

Ask about the RSP Home Buyers' Plan

The RSP Home Buyers' Plan (HBP) lets a first-time buyer withdraw up to $25,000 from RSPs for a home purchase. The withdrawn amount must be repaid within 15 years, subject to a minimum annual repayment that is 1/15 of the amount withdrawn. If the full $25,000 is withdrawn, the minimum annual repayment is $1,333. If less than the minimum is repaid in any particular year, the balance is added to the taxpayer's income.

 

Insuring Your High-Ratio Mortgage

CMHC or Genworth Financial may insure a mortgage for up to 95% of the lending value of the house. Therefore, purchasers do not need a large down payment. Eligible borrowers include anyone who buys a home in Canada intending to occupy it as their principal residence. And the availability of government-backed mortgage insurance is restricted to homes with a value of $1 million or less.

 

Purchasers can use up to 39% of their gross family income for payments of mortgage principal and interest, property taxes and heating. A buyer's total debt load (including consumer loans, etc.) cannot exceed 44% of the gross family income.

 

People who insure a mortgage loan with CMHC or Genworth pay a premium. The premium is based on the down payment and loan amount. A list of the mortgage insurance premiums can be found here.

 

 Cost:

  Premiums can be paid up front or added to the principal amount of the mortgage.

 Loan Amount:

  Up to 95% of the lending value of the house.
 Mortgage Term:   To be set by the lending institution.

 Max. House $:

  Varies by market.

 

Want more information? Visit the Canada Mortgage and Housing Corporation or Genworth Financial websites.

 

For more information on obtaining a mortgage, please complete the form below.

 

Please enter the numbers found on the right.

 

VITA LI VIGNI, SALES REP    |  Dir: 416-662-2945  |  Off: 905-695-7888   |   vlivigni@trebnet.com

Sunday December the 9th, 2018 
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