Home Purchase Mortgage
What Is A Purchase Mortgage?
A home mortgage is a loan provided by banks, mortgage companies, or other financial institutions for the purchase of a primary or investment residence. The loan amount is calculated by subtracting the down payment from the purchase price of the property. The borrower is required to make regular payments, which include principal and interest, until the loan is fully repaid. This type of loan is secured by the property and may have varying repayment terms depending on the lender and the borrower’s creditworthiness.
How Much Should My Down Payment Be for a Purchase loan?
Typically a down payment should be at least 20% of the purchase price of the home.
You will need to purchase mortgage insurance. Mortgage insurance comes from three different companies:
What If My Down Payment Is Less Than 20% Of The Home Purchase Price?
You will need to purchase mortgage insurance.
Mortgage insurance comes from three different companies:
- CMHC – the largest one and 100% backed by the Government of Canada.
- Sagen – 95% backed by the Government of Canada.
- Canada Guarantee – 95% backed by the Government of Canada.
What Is The Interest Rate Of A Mortgage?
There are two types of rates for a purchase mortgage:
- Fixed-rate – remains the same for the entire term of the mortgage.
- Variable-rate – variable rates adjust with prime.
When priced lower than a fixed rate:
- Tend to perform better than fixed in the longer term.
- Lower penalties.
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