Everything You Need To Know About High Ratio Mortgages

1
Everything You Need To Know About High Ratio
Mortgages
2

• When youre searching for a mortgage in Canada,
  youll find theyre either high-ratio, or
  low-ratio, and its important to understand the
  difference between the two.
• What are high ratio mortgages?
• Down payments totalling less than 20 of the cost
  of the home youre planning to buy, are
  high-ratio mortgages. The term refers to the
  ratio between the mortgage or loan amount, and
  the value of the property, which can also be
  referred to as the loan-to-value-ration.

3

• What are low-ratio mortgages?
• These are the opposite of high-ratio mortgages,
  involving down payments of more than 20 of the
  property purchase price.
• What are the ramifications of having a high-ratio
  mortgage?
• With these mortgages, youll be required by
  federal law to pay for mortgage default
  insurance, or CMHC insurance, which comes with
  its own set of consequences

4

• Premium prices premiums must be paid upfront,
  at the beginning of your mortgage, and are added
  to the total mortgage amount. They are typically
  between 2 and 4 of the amount.
• Amortization period this period is the total
  amount of time that you have, to pay off your
  mortgage, and for insured mortgages, the maximum
  period will be 25 years.
• Interest rate as insured mortgages come with
  less of a risk for lenders, meaning that they can
  offer you a lower rate of interest. That said,
  the cost of the insurance usually totals more
  than the potential savings made on a mortgage
  with a lower interest rate.

5

• Guidance for getting a high-ratio mortgage
• The bigger the down payment you can make, the
  less likely you are to have to pay CMCH insurance
  premiums, and if you purchase a cheaper home, the
  down payment will make up a larger percentage of
  the total price, which again, could you take over
  the 20 threshold. Its also important to
  carefully consider the mortgage rates available
  to you, even if you take out a high-ratio
  mortgage, and the best way of doing this is to
  work with a broker, who can compare all rates and
  get you the best deal for your circumstances.

6

• High ratio mortgages give first time buyers, or
  those with fewer assets, the opportunity to get
  their feet on the property ladder, and if you do
  end up taking out a high ratio mortgage, remember
  that youll have plenty of time to pay it off.
  However, working with a mortgage broker can help
  you get the right deal that takes your current
  and projected financial situation into full
  account.

7

• Mortgage-broker-Calgary is your best resource for
  finding a mortgage for your property. Luke Wile,
  is the best calgary mortgage broker and is proud
  to serve clients from across Canada, while being
  centered in Calgary, Alberta. Luke is proud to
  serve his clients with a personalized approach to
  finding his clients the best and lowest Canadian
  interest rates and terms offered by the major
  banks and private lending institutions. If you
  are looking for mortgage broker in Calgary, with
  Luke Wile you can get fast and personal expertise
  for your mortgage!