A mortgage with a down payment of between 5% and 20% of the purchase price is considered a high-ratio mortgage. While interest rates are generally lower for high-ratio mortgages, there are additional insurance premiums applicable. This is because there is additional risk involved with high-ratio mortgages as there is lower equity available in the home. The additional premiums are not charged upfront but are rather lumped into the mortgage amount.
While this type of mortgage ends up being more expensive in the long run than one where the down payment is 20% or more, its main advantage is that it allows you to enter the market and become a home owner sooner. Many first-time home buyers take advantage of this program – especially in a market where home prices are constantly increasing.
Most recently, we’ve helped a young family with two-under-two purchase their first home under this program.
If you would like to explore your options and learn more about this program, feel free to book a free consultation and we would be happy to explore your unique situation and discuss your options.
