It’s a lifestyle choice.
Let’s start with the basics: a mortgage is a loan you take out to buy property. It’s a way of purchasing a home without paying the full value immediately.
But choosing a mortgage isn’t just a financial choice – it’s a lifestyle choice.
If you can’t afford the 20% down payment for a conventional mortgage, a High Ratio Mortgage allows for a smaller down payment so you can own a home – and you can own it now.
In Canada, mortgage insurance is required under Bank Act Law for those making less than a 20% down payment on a property. So if you purchase a home with a High Ratio mortgage, you will pay mortgage default insurance.
Mortgage default insurance is a win-win situation for both homebuyers and lenders. Lenders rely on mortgage default insurance to protect themselves from financial losses in case a loan is not repaid. Because lenders have this protection, they are able to offer loans with very small down payments, provided credit requirements are met. This means you can get access to homeownership earlier at the lowest cost, and with a small downpayment. It also means you will begin to build equity in your home sooner.