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High-Ratio Mortgages Aid Buyers

By law, an institutional lender cannot normally negotiate a loan which is more than 75 percent of the lending value (market value) of any home unless the loan is insured.

High Ratio Mortgages are designed particularly for those who can provide from 5 percent to 25 percent of the market value of the home as a down payment.

If you haven't enough savings for the conventional 25 percent down payment, and you have been considering a second mortgage or collateral loan to make up the difference, a CMHC insured high ratio mortgage provides an economical alternative to taking on more than one mortgage debt.

• Mortgage insurance available anywhere in Canada
• One monthly mortgage payment
• One set of fees
• One renewal period
• A lower interest rate than is usually available for second mortgages
• Protection against the possibility of having to negotiate for a more expensive first mortgage rate when the second comes due
• The security of knowing your mortgage will be renewed

An important point to keep in mind is that mortgage loan insurance protects the lender and its depositors -- not the borrower. CMHC takes on lender's risks so they feel confident about the loans they make to home buyers. CMHC assumes the risk and you get to move into your own home sooner because you don't have to save as long for a down payment.

As well, the mortgage insurance should not be confused with life insurance one might buy to pay off the mortgage if the borrower dies before the loan is paid off.

In order to arrange a high ratio CMHC insured mortgage loan, fill our an application through your NHA-approved lender. Approved lenders include most of Canada's Chartered Banks, Trust Companies, Life Insurance Companies, Credit Unions and Caisse Populaires.

Most financial institutions also use the TDS ratio to determine the maximum monthly debt payment which you can comfortably support. The TDS is the ratio between gross annual income and total annual debts. These debts include mortgage payments, credit card payments, loans, car payments and so on, to meet the TDS requirements, total annual debts should not exceed 40 percent of gross annual income.

In addition to the purchase price of a home, other costs such as land transfer tax, legal fees, appraisal fees, and moving expenses must be added to the total amount of money needed to complete a purchase. On the purchase of a $200,000 home, these can add up to between $3,000 and $5,000.

Determine your purchaser profile

Our mortgage consultants will take you through these steps in preparing a pre-qualification certificate, but for a general idea of what your purchase profile looks like, take a few minutes to visit us.

Pre-qualifying is easy, free and convenient -- you should have your pre-qualification done. The mortgage amount and interest rate that appears on the certificate is subject to the usual credit review and a satisfactory property appraisal at the time of purchase.

Completing a pre-qualification does not obligate you to arrange your mortgage financing with us. If you come upon more favorable terms to suit your needs elsewhere.

Save time and energy

With your pre-qualification certificate in hand, you have a clear idea of how much you're qualified to borrow, the appropriate price range for you new home, and the size of your mortgage payment.

You've saved time because much of the paperwork involved in qualifying for a mortgage is done; you've saved energy because you're shopping with confidence in a price range you know you can afford and the large selections of listings.

Now you can relax and concentrate on the choices that exist in today's real estate market and the other more enjoyable aspects of house hunting.

For further information, please contact us at your convenience.

GRG Financial Services Inc.

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