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moneysense.ca, 1/12/06
Cheaper Mortgage Insurance
Rob Carrick points out in today’s column in The Globe and Mail that mortgage insurance that homeowners have to buy for a high-ratio mortgage is getting cheaper:
- Insurers are setting premiums for borrowers who are getting a mortgage for 100% of the value of their home based on the credit score. Competition among the insurers has driven down premiums at this level of borrowing to 3.1%.
- The federal government has introduced legislation that would reduce the mandatory insurance requirement from the current 25% to 20% resulting in a potential saving of 0.65%.
moneysense.ca, 1/12/06
Who in their right mind would get a mortgage for 100% of the value of their home? The interest rate would likely be so high that your payments would be interest-only! The only circumstance that would make sense would be to buy a relatively inexpensive shoebox condo, but even then, if you can’t afford to put anything down, why are you getting one? Rent it!
Like you said, the article has introduced legislation that the min downpayment required will be 20% instead of 25%. However, whether or not the bill will pass legislation is another issue altogether. Like most Canadians, I hope the bill does pass.
Joe
http://www.StingyFinance.com
what about do a 80-15-5 loan? why not just do a 5% down payment to avoid the PMI.