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Paramjit S. Girn

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High Ratio Mortgage Insurance

High Ratio Mortgage Insurance: Get a Mortgage without a Huge Down Payment

Many first time home buyers are increasingly finding it more difficult to save for their first home. With housing prices constantly on the rise, high ratio mortgage insurance is the best way to secure a mortgage that will not require them to put down the traditional 20% as a down payment.

The good news is that there is a solution if you cannot come up with the large down payment. It is called a high ratio mortgages.

What are high ratio mortgages?

High ratio mortgages are designed specifically for home buyers that cannot raise 20% of the value of the home or property for a down payment. However, there is a minimum when it comes to mortgage down payment. It is 5% down. But, anyone that intends on putting down between 5% and 20% of the purchase price can apply for this type of mortgage. However if you qualify, mortgage delivery guy can help you align with lenders who are willing to lend you money with high ratio mortgage insurance.

The truth is that Lenders do not want 20% down. They will give you a mortgage with as low as 5% down or even pay some of your down payment back. Why? High ratio mortgage insurance, through CMHC or Genworth, secures the lenders money given to the borrower in case the borrower defaults. Therefore, while the insurance premium is paid by the borrower, it also insures the banks money.

When it comes to applying for mortgage insurance with CMHC or Genworth, it is the bank, who signs up depending on who the borrower qualifies with. Once approved, mortgage loan insurance is beneficial to both the borrower and lender as it protects lenders if the mortgage defaults and allows people to get approved for the purchase of a home with as little as 5% down.

How do I get high ratio mortgage insurance?

In order to get loan insurance, the bank or lender is required to pay an insurance premium, which is commonly passed onto you, the borrower. The premium amount is based on the portion of your properties price that is financed by the mortgage. So, it will vary based on your specific situation.

You can pay the premium in one of two ways:

  • A lump sum
  • It can be bundled into our monthly mortgage payments

Therefore, whether you have the money or not, you will still be able to get the insurance premium that will help you secure a mortgage.

4 Reasons why should you consider high ratio mortgage insurance?

While you do have to pay an insurance premium to secure your mortgage, there are a number of benefits to taking this approach:

  1. You can become a homeowner much quicker
  2. Interest rates with 5% or 20% down are similar
  3. Mortgage loan insurance is flexible and can be applied to many property types and housing options
  4. The CMHC and other mortgage insurance providers offer a number of options that can be designed to meet your specific financial requirements and situation.

Depending on how quickly you dream to become a home owner, we can direct you into the right direction. You are encouraged to contact us for a free and confidential in person strategy session to discuss your home ownership plan.

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