In 2014, Calgary mortgage broker Steven Crews, from Verico iMortgage Solutions, did a series of radio broadcasts about mortgages and mortgage financing for Shine FM. Have a listen and you’ll pick up some helpful tips…
Historically, first-time buyers were the only groups permitted to get a mortgage with a 5% mortgage down payment. Now everyone can purchase a home, whether it’s your first or next home, with a 5% minimum mortgage down payment.
Recently, I heard from a few clients who thought that they needed 10% down to purchase a home. They thought that only first-time home buyers could purchase with 5% down.
In fact, anyone can purchase a home with as little as 5% down. When you purchase a home with less than a 20% down payment, it’s called a High Ratio Insured Mortgage. A High Ratio Insured Mortgage, is insured by one of either CMHC, Genworth or CG. The insurance is for the bank, in case you can’t make the mortgage payments, and allows them to lend more than 80% of the value of the home.
Providing 20% or more as a down payment is called a conventional mortgage. Typically, the bank doesn’t require any insurance to lend up to 80% of the value of the home.
Last year, the government made some changes to the lending regulations and High Ratio Insured Mortgages. Today, if we want to refinance a home that we currently own, we can only refinance up to 80% of the value of our home with most lenders in Canada. That means it takes 5% down to purchase but 20% in equity to refinance.
Do you have a question or topic that you would like to learn more about? Let me know. If your question or topic is used on the ShineFM Mortgage Expert segment you will receive something special!