There are many costs to consider and know about when purchasing a home. Especially if it's your first one. One of those costs is Mortgage Loan Insurance. Generally speaking financial institutions offer mortgage lending up to a maximum of 80% of the value of the home or, in other words, with a 20% down payment. If you have less than 20% down payment then a 3rd party insurer has to come in to insure against the possibility of defaulting on paying the mortgage in the future. There are several providers of this insurance but the primary 2 in Canada are CMHC ( Canada Mortgage Housing Corporation) & a company called Genworth.
They both have many different kinds of programs for different situations, clients and properties but generally speaking the less you have to put as a down payment the higher the premium. It's calculated on a percentage of the Purchase Price. For example if you purchased a home for 370K and put the minimum down, which is 5%, then the insurance premium you would have to pay would be around $11,000.00 A fare chuck of change to say the least.
CLICK HERE to check out all of CMHC's mortgage loan programs as well as the premiums associated with them!
Tony Marchigiano | Mortgage Specialist - Mortgage Sales BC Region, RBC Royal Bank | Royal Bank of Canada | T. 604-505-7109 | F. 778-737-0054