Congratulations on moving forward with the purchase of your first property. We are fully aware that you have individual, specific and unique needs. We do everything possible to help you achieve your dream of ownership. In order to succeed, we offer you our advice and a negotiating power that will assure you the best mortgage conditions on the market as well as a personalized service tailored to your needs.
If you buy a property and need to borrow more than 80% of the value of the property, your mortgage loan must be insured. This insurance protects the mortgage lender if the buyer defaults on his mortgage payments. It also allows the lender to offer you a mortgage for the purchase of a single-family dwelling or a duplex with only 5% cash down. In the case of a triplex or 4 unit building, the minimum cash down is 10% of the purchase price. It is important to keep in mind that you will be required to have an extra 1.5% of the purchase price available to cover closing costs.
If your down payment is less than 20%, you will have to pay a mortgage insurance premium that can be included in the initial amount of your mortgage loan. This premium will be based on the percentage of the property’s value being borrowed. The three best known insurers in Canada are: The Canadian Mortgage and Housing Corporation (CMHC), Genworth Financial and AIG.
The mortgage insurance premium is paid once at the time of closing. It can be added to your mortgage amount or paid separately. The standard rate varies between 0.60% and 3.35% of the mortgage amount, depending on the amount of cash down disbursed.
For buyers that have not accumulated the funds required for a 5% down payment, certain lenders offer products that include a cash back that can be used as a down payment. Keep in mind that you are still required to have excellent credit and a minimum of 1.5% of the purchase price of your own savings to cover closing costs.
For conventional loans, those without mortgage loan insurance, lenders require a down payment of at least 20% of the purchase price.
The Home Buyers Plan allows contributors to the Registered Retirement Savings Plan (RRSP) to withdraw, income tax free, at the Federal and Provincial levels, up to $25000.00 from their RRSP in order to finance the purchase or construction of their first home.
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