What if owning your own home was within reach? What if turning rent into mortgage payments could be a reality?
With interest rates sitting at an all-time low, seen never before by your parents and even your grandparents – now is an ideal time for you to embark upon homeownership. But these rock-bottom rates won’t be available forever. The Bank of Canada estimates fixed rates could begin to rise soon. Does the historically low interest rates still don’t tip the scales for you? Let’s look at some other reasons.
The main reason many renters feel that they cannot afford to purchase a home has to do with saving for a down payment. But there are many solutions available today that can help you become a first-time homebuyer. Many lenders will allow for a gifted or borrowed down payment.
There are also program available from some financial institutions where they will offer a ‘free down payment’ of a ‘flex down’. You will end up paying about one per cent more in interest rate, but the program will help you get in the homeownership door and start accumulating equity earlier. You will however have to stay with the original lender for the full initial five-year term or else you’ll have to pay the down payment back.
You could also speak to us to get pre-approval prior to setting out home shopping. This can help you set your mind at ease, because as with many first-time buyers you might feel overwhelmed by the financing and buying processes, and often don’t know what it truly costs to purchase a home.
Types of Mortgages
There are all types of mortgages out there.
Conventional Mortgage - A conventional mortgage is a mortgage loan that is equal to, or less than, 80% of the landing value of the property. The lending value is the property’s purchase price or market value – whichever is less. For a conventional mortgage, the down payment is at least 20% of the purchase price or market value.
High-ratio Mortgage - If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ration mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing.
Your mortgage expert can help you find the best mortgage at the best rate for you.
Article from: www.cmhc-schl.gc.ca