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.
There are many different types of mortgages. The two basic types of mortgages are Conventional Mortgage and High Ratio Mortgage .
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 insurance.
Mortgage insurance is a win-win situation for both homebuyers and lenders. Lenders rely on mortgage 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 down payment. It also means you will begin to build equity in your home sooner.
When shopping around for a mortgage, a certified mortgage broker can help you navigate the journey. Ask your mortgage broker these four questions to get the most out of your first meeting.
Being self-employed can sometimes make securing a mortgage trickier, but it’s not impossible. If you are self-employed and looking to qualify for financing, check out Genworth Canada’s Business for Self Program.
For more tips on achieving the homeownership dream sooner, visit: homeownership.ca/resources.
Genworth Canada is the largest private residential mortgage insurer in Canada. The Company provides mortgage insurance to Canadian residential mortgage lenders, making homeownership more accessible to first-time homebuyers.
For more information about Genworth Canada, visit: www.genworth.ca