Mortgage Costs

FINANCING COSTS
In addition to the interest payable on the mortgage there are a number of financing costs that need to be added.  These can include the cost of an appraisal, application fees, surveying costs, mortgage insurance fees and inspection fees.  You should approach the question of mortgage financing in the same manner as you would any other major purchase - "It pays to shop around and compare.  Various lenders offer different types of loans and, depending on your circumstances, you may be better off with a type of loan feature that your regular bank doesn't offer.

To find out how you can save 1/2 to a full % off your mortgage rate ask Dave and Jeff!


MORTGAGE INSURANCE

Mortgage insurance through CMHC (Canada Mortgage and Housing Corporation) is a cost that comes with high ratio financing where greater than 75% of the purchase price is borrowed.  If you have a down payment of 25% or more, you qualify for "conventional" financing.  For High Ratio Financing, the premium ranges from 1.5% to 3.7% of the amount of the mortgage, increasing as the loan to value increases.  For example, between 75% and 80%, financing the insurance premium will be 1.25%, up to 85% it is 2%, above 85% it is 2.5%, and above 90% it is 3.7%.

This Premium, which you have to pay, protects the lender.  It ensures that they won't lose money if you default on your payments, forcing them to foreclose and sell the property potentially at a loss.  Such insurance is mandatory on all high ratio loans (where the down payment is less than 25%).  All lenders charge the same premium, so from this point of view it makes no difference which lender you choose to finance your mortgage.