Brampton-Mississauga Mortgage Insurance
Trusted Brampton, Mississauga, GTA Insurance Services
There are some requirements you have to meet in order to qualify for mortgage default insurance:
The maximum amortization for insured mortgages is 25 years.
If the purchase price is between $500,000 - $999,999 a higher down payment is required. The minimum down payment is 5% of the first $500,000, and 10% of the remaining amount.
Mortgage default insurance is not available on homes purchased for more than $1 million; this means that a 20% down payment is required on these homes.
How do you pay mortgage default insurance?
Mortgage default insurance is financed through your mortgage. Unlike closing costs, such as legal fees and land transfer tax, it does not require a lump sum cash outlay at the time you purchase your home. Instead, your mortgage default insurance premium is added to your mortgage amount and paid off over the life of your loan. Continuing with the above example, the revised mortgage amount would be $260,000 + $8,060 = $268,060; this is how much you would need to borrow from your lender, in order to purchase your home.
How to minimize mortgage default insurance
There is only one way to minimize your mortgage default insurance: increase your down payment as a percentage of your home price. To do this, you either have to increase the amount you put down or purchase a less expensive home. Examining the first option, you may want to consider additional sources for your down payment, such as a gift from a family member or, if you are a first-time homebuyer, a tax-free withdrawal from your RRSP.