35% Down Payment… The New Conventional Mortgage?
How much will my home really cost? If you are looking to buy a new home, one of the most difficult things can be putting together a Down Payment for the mortgage. So how much do you really need to put together before you can get into the home of your dreams? Let’s take a look at some of the different options.
0% Down Payment– A Thing of the Past?
If you have been in the housing market before, you might remember a time when banks offered extremely inexpensive mortgage options, including the “zero down payment” mortgage. Although these types of mortgages were extremely attractive for obvious reasons, you may remember something called the Great Recession of 2008. The unfortunate downside to these mortgages was that far too many unqualified buyers were opting into mortgages they could not realistically afford. When these people defaulted en masse, it led, in part to the collapse of the housing market. As a result, Canadian legislators moved to implement safety measures preventing such high-risk mortgages from being so freely available. As a result, if you are looking to buy a home through a federally-regulated lender, you will be required to make a 5% minimum down payment.
…
Mid-Range Down Payment – 20% Down
In the Canadian housing market, 20% down is a bit of a milestone. If you put together less than 20% for a down payment, you will be required to also purchase default insurance, a pricy addition to your regular mortgage payments. However, If you have 20% or more, you will be exempt from this burden. Common wisdom dictates that, in the long run, you will save a substantial sum of money if you can put together at least 20% for a down payment, as it will reduce your monthly payments substantially.
…
35% Down Payment – The Ideal Mortgage?
Further conventional wisdom dictates that if a 20% down payment is good, 35% must be even better. The importance of 20% is, of course, that the CMHC insurance is no longer required, but what if you are situated so that you can afford an even larger down payment? Simply put, the more money you are able to commit up front to a home, the less expensive it will be in the long run. Not only will you have less to pay off, but you will qualify for even more appealing interest rates. With lower interest rates and no insurance to worry about, the overall cost of your home will be substantially lower and you will be finished paying off your home far more quickly than if you were to put down the minimum.
…
I can’t afford this!
How much will my home really cost? Of course, not everyone is so situated that they can afford to put down 20-35% on a home. It’s important to note that, although there are benefits, a large down payment is not required to get into the housing market. If you are a first-time home buyer or are unable to save up a larger down payment, there are options available for you. An experienced Mortgage Advisor will help you come up with the best options that will work with your financial situation. Contact Client First Mortgage Solutions today!
Original Article – Dominion Lending Centre
