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Buyer Tips
MORTGAGE OPTIONS
The mortgage you choose will form the foundation for your financial stability…
CONVENTIONAL:
Regulations under The Bank Act prohibit lenders from lending in excess of 75% of the purchase price or the appraised value of a property without obtaining Hi-Ratio Insurance. A loan for up to 75% of the purchase price of a property is a conventional mortgage.
HIGH RATIO:
A loan for up to 95% of the purchase price of a property.
CMHC Insurance:
High ratio mortgages must be insured through CMHC (Canada Mortgage and Housing Corporation) or GENCOR (G.E. Capital Corporation). These Insurers guarantee the risk of lending to home buyers who need a high ratio mortgage. An insurance premium is paid by the borrower on behalf of the lender . The insurance premium that is paid to CMHC is to protect the lender in the event that the mortgage is not paid. This is not life, disability, or job loss insurance.
The insurance premium is calculated as a percentage of the mortgage amount, depending on the loan to value, and may be added to the mortgage amount.
The premiums are as follows:
| Loan to Value |
Premium |
| 75-80% |
1.25% |
| 80-85% |
2.00% |
| 85-90% |
2.50% |
| 90-95% |
3.75% |
Other high ratio financing costs include an appraisal of approximately $235.00 plus 8% PST on the insurance premium.
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