GET into YOUR HOME sooner. MORTGAGE LOAN INSURANCE helps YOU do it. PUT as little as 5% DOWN.
STEP 6 • MORTGAGE LOAN INSURANCE
When you need a mortgage loan that is more than 75% of the purchase price of your home, a mortgage loan insurance is required. It protects the lender and, by law, most Canadian lending institutions require it.
Having mortgage loan insur- ance means that if you, the borrower, default on your mortgage, the lender is paid
back by the insurer—CMHC or a private company1. With the risk of
lenders have the confidence to make mortgage loans of up to 95% of the pur- chase price of the home (subject to price ceilings). That means your down payment can be as little as 5% of the house price. With mortgage loan insurance, many Canadians who might be unable to obtain a 25% down payment can still buy a home.
What does mortgage loan insurance cost? There are two components an application fee and an insurance premium. The application fee typically ranges from $75.00 to $235.00 and mortgage loan insurance premiums range from 0.5%-3.75% of the amount of your loan (additional charges may apply), depending on the size of the loan and the value of your home. The premium can be added to your mortgage loan and paid off as part of your regular mortgage payments, or paid off in a lump sum at the time of purchase to save interest charges on the premium itself.
1 It should be noted that the protection provided to the
lender by the insurer does not relieve the borrower(s) of the obligations under his/her mortgage contract.