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the dream of homeownership is within grasp even if you don't have
enough money to make a 25 per cent down payment. Called "high
ratio mortgages" or "NHA insured mortgages", these
are available with a 10 per cent downpayment, or even 5 per cent if
you are a first time borrower. However, since you are borrowing more than the usual 75 per cent of the home's appraised value (or purchase price), the federal government's National Housing Act states that the mortgage must be insured against default and that you pay the cost of the insurance. That cost can range from one to three per cent of the mortgage amount, and is added to the mortgage principal. Coming up with the Cash You'll want to look into government assistance programs designed to help homebuyers. Check the blue pages of your phone book for the nearest regional housing office of your provincial government. Also, contact the nearest regional office of CMHC (Canada Mortgage and Housing Corporation) which is responsible for administering the federal government's National Housing Act. CMHC is a good source of information on government-insured loans and other matters, such as renovation loans and building inspection checklists. Ask for an information package. Benefits of a CMHC-Insured Mortgage You can qualify for a CMHC insured mortgage anywhere in the country (over three million Canadians have financed their homes with CMHC since 1954). CMHC will insure most homes including manufactured mobile homes. There are no restrictions on the size of location of the home as long as it meets minimum building standards. Money lending institutions are CMHC approved. Mortgage insurance enables you to purchase a home sooner, without having to save the conventional 25 per cent downpayment. (This insurance isn't fire or job loss insurance.) CMHC mortgages have very favourable prepayment privileges - the most important feature now is the three-month interest charge after three years into a term. This allows you to pay off the mortgage or re-negotiate the terms of the mortgage to take advantage of possible lower interest rates. This feature overrides any financial institution's policy, which is usually an Interest Rate Differential. First Home Loan Insurance By the end of 1993, over 138,000 units nationally had been purchased under the First Home Loan Insurance program. The First Home Loan Insurance program has been extended until 1999 and any term, qualified on a three year rate, is now available. Homebuyers who have used First Home Loan Insurance (F.H.L.I.) to purchase their homes are typically young families with household income close to the national average. Most of the families have two wage-earners working in a full range of occupations. In short, those purchasers are fairly representative of average Canadians. Did You Know That: More than three-quarters of purchasers were couples (77 per cent). Twenty-three per cent were single person households. Approximately 40 per cent have between one and two children. The average age of FHLI purchasers is 33; over 80 per cent of purchasers are under 40. Average household income is $52,246 which is close to the average for Canadians in general. The carrying costs of FHLI-purchased homes represents 24 per cent of their total income, while total debts are at 32 per cent; these rates are similar to the levels for purchases with higher downpayments. Article:
It's All In The Delivery
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