Mortgage Loan Insurance
For a large number of Canadian home buyers — especially first time home buyers — saving enough money for a down payment is the hardest part of becoming a home owner. Saving a down payment of 20% can be extremely difficult for a lot of people.
Mortgage loan insurance enables home buyers to purchase a home with 5% down payment. The amount of the insurance premium depends on the amount borrowed from the lender.
Mortgage loan insurance premiums can be paid in a lump sum or be added to your mortgage and included in your monthly mortgage payment. For more information, talk to your mortgage professional, or contact a Mortgage Loan Insurance providers.
The Federal Department of Finance has made a number of changes to promote more conservative lending practices on government backed insured mortgages.
Measures include:
- Maximum amortization of 30 years;
- Down payment required of 5%, although purchasers can borrow towards this amount;
- Minimum credit score of 600 an adjustment from the previously published 620;
- Previously announced limit of 45% for total debt servicing replaced with a 'principles' based approach;
- Enhanced documentation requirements including income verification and up to date appraisals;
- Lowering the maximum amount that Canadians can borrow in refinancing their mortgage to 85% of value of the home.
- Withdrawing government insurance backing on lines of credit secured by home such as home equity lines of credit or HELOCS
