When you begin the home buying process, it can be confusing trying to figure out everything involved in a Brampton mortgage. Understanding which mortgage broker to work with and what loan option you should choose is only half the battle. The other half is figuring out the additional costs involved with your mortgage. These extra costs include, but are not limited to, your down payment. We at Lotus Loans & Mortgages Corp. will provide a detailed list of closing costs that is unique to your purchase transaction to assist you in budgeting

If you do not meet the specific requirements when paying for a down payment, your Brampton Mortgage Broker may require you to obtain mortgage insurance. So, to help provide some insight, our team at Lotus Loans & Mortgages has listed everything you need to know about mortgage insurance.

 

Mortgage Default Insurance

In Canada, mortgage insurance is referred to as mortgage default insurance or CMHC insurance. This is charged if you pay less than 20% of your home’s purchase price. If you pay less than 20% you will be viewed as a higher-risk borrower, which means Lenders believe you may be more likely to default on your monthly payments. Due to this increased risk, you will be charged mortgage default insurance as an additional fee on top of your monthly payments so Lenders are protected in case you were to default on your mortgage.

If you are required to obtain mortgage insurance, the maximum amortization period is 25 years. Also, if you are purchasing a home that is over $1 million, your minimum down payment requirement is 20%, meaning mortgage default insurance is not an option for properties with purchase prices greater than 1 million dollars.

It is also worth noting, however, that if you have less than 5% of your down payment you will not be able to qualify for a Brampton home loan because 5% is the minimum down payment requirement. Therefore, make sure you have enough money set aside for your down payment and if you don’t have enough ask us at Lotus Loans & Mortgages how to create a down payment.

 

Contact Us

For more information on mortgage default insurance or to get started on your mortgage application today, please contact the Lotus Loans & Mortgages team at 905-791-1100.