Pre-Approval It is important to be qualified or pre-approved for financing before you start looking for a home. This lets you and your Realtor know what you can afford as well as providing a guaranteed cap on the interest rate for up to 120 days. To obtain pre-approval contact your Realtor or Mortgage Broker.
The benefit of a mortgage broker is that he or she operates independently of the lender and therefore can assist you in finding the best financial product at the best rate form a variety of sources and usually at no expense to you.
Conventional Mortgages The maximum amount of a conventional mortgage is 80% of the purchase price (appraised value). The amortization or length of time in which to repay the loan is usually 25-35 years. The term of the mortgage is the number of months or years, usually six months to five years, for which the rat of interest is set.
High Ratio Mortgages If you have between 5% and 19.99% of the purchase price for a down payment, your mortgage will considered "high-ratio". High-ratio loans are subject to a loan insurance premium, which is set by the Canada Mortgage and Housing Corporation (CMHC). This premium is calculated as a percentage of the price and is usually added to the mortgage amount but can be paid as a lump sum at the time of purchase. The lower you're down payment, the higher the premium.
Down Payment------------- Loan Insurance 5% to 9.9% -------------------- 3.75% 10% to 14.9% ----------------- 2.5% 15% to 19.9% ----------------- 2.0% 20% to 24.9% ----------------- 1.25% 5% Down Program
