Mortgage insurance can make a huge difference, making it possible to purchase a home with as little as a five percent down payment.
Mortgage insurance, also known as mortgage default insurance or CMHC insurance, is mandatory in Canada for down payments of between five and 19.99 percent. Mortgage insurance protects the lenders in the event a borrower stops making payments and defaults on their mortgage loan.
Mortgage insurance allows homebuyers to access the real estate market when they otherwise would not be able to. The service does have a cost of between 2.4 and 4.0 percent of the total mortgage amount; however, without the insurance mortgage rates would be higher and the risk of default would increase.
With the protection offered by mortgage insurance, lenders can offer lower mortgage rates, as the risk of default is passed along to the mortgage insurer.
Qualification requirements for mortgage insurance:
- Maximum amortization period of 25 years
- A higher down payment for properties priced at between $500,000 and $999,999
- Property must be priced at less than $1 million
Please contact us for additional information.