Purchasing ...

Your First Home
New Home Construction
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A 'Fixer Upper'
Another Property
A Cabin

Understanding your mortgage options can be daunting, and there is no “one size fits all” approach. We carefully guide you through the process, ensuring you get the best mortgage with the lowest rate.

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Mortgages

Insured Vs. Conventional

Canadian mortgages vary based on their loan-to-value or, put, the percentage of the down payment. The home is an asset, securing the mortgage loan. The more that is owed relative to its value will dictate what type of mortgage is needed.

In the eyes of the bank, it's all about risk. Among other variables, such as Credit Scores and Income, the main factor is the property loan-to-value. In fact, with a large down payment, a homebuyer with a low credit score will have the opportunity to purchase. However, not every buyer will have a large down payment at their disposal.

This is where the National Housing Act allows for a purchase with a lower down payment, as low as 5% of the purchase price. To achieve this, the mortgage must be insured to alleviate the risk from the bank, with the insurance premium passed onto the homeowner.

There are many differences between an Insured and a Conventional mortgage. The policies surrounding these are constantly changing, and there are also variations of each, depending on the bank. Here are some of the highlights of each.

Insured

Conventional

Down Payment

Sources of Down Payment

Accumulating the down payment is the biggest challenge prospective homebuyers face. The down payment can come from several sources. According to the "2021 First-Time Homebuyer Survey & Financial Fitness Study*" performed by Sagen, the most common source for homebuyers ' down payment was their Personal Savings, followed by their RRSP.

The CRA offers a Home Buyers' Plan for those wishing to withdraw from their RRSP. The Home Buyers' Plan is a program that allows you to withdraw from RRSPs to buy or build a qualifying home.

Another common source many homebuyers have availed of are gifted funds from an immediate family member. Each lender will have its own policies surrounding this source of down payment. Alternatively, you can borrow part or all of the down payment. Borrowed down payments are not accepted by all lenders and come with additional qualifying criteria.

Borrowed

Cash Advanced from a Line of Credit.

Gift

Gifted Funds from an Immediate Family member.

RRSP

Investments such as an RRSP, TFSA, and/or Mutual Funds.

Personal Savings

Accumulated Savings in a Canadian Bank Account for a minimum of 30-90 days.

*Study completed by Environics Research on behalf of Sagen and in association with the Canadian Association of Credit Counselling Services. First-time homebuyer study findings in collaboration with Royal LePage.
For more information on Canada Revenues Agencies (CRA) Home Buyers Plan (HBP) please visit: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html

The Rate Illusion

Mortgage interest rates are important, but there is typically a reason why an interest rate is low or high behind the scenes. That is why it is best to look at the cost, how much interest you are paying. After all, 2.05% looks better than 2.24%, right?… Not if it means paying an additional $15,760.94, as shown in the example below.

An insured mortgage will have a lower interest rate but at a cost. There is a premium, and it is rolled into the mortgage. Not only do you have to account for this amount, but because it increases the balance, it now increases the amount you pay in interest.

While a conventional mortgage will have a higher interest rate, there is no insurance premium. Even with the difference in rates, conventional mortgages had a lower cost.

	Insured Mortgage			Conventional Mortgage
Down Payment	5%	10%	15%	20% +
Purchase Price	$325,000
Required Mortgage	$308,750	$292,500	$276,250	$260,000
Insurance Premium (%)	4.00%	3.20%	2.80%	0.00%
Insurance Premium ($)	$12,350	$9,360	$7,735	$0.00
Total Mortgage Amount	$321,100	$301,860	$283,985	$260,000
Interest Rate	2.04%			2.24%
Amortization	25 Years
Monthly Mortgage Payment	$1,365.91	$1,284.06	$1,208.03	$1,106.00
Insurance Prem. (including interest)	$15,760.94	$11,944.37	$9,871.28	$0.00
Total Interest Paid on Mortgage	$88,672.04	$83,359.46	$78,422.55	$71,799.32

Mortgage Products & Programs

Available for Insured Mortgages

5.00% - 19.99% Down Payment Program

This product provides qualified borrowers with an opportunity to own a home with as little as a 5% down payment.

Purchase Plus Improvements

A unique mortgage product that allows qualified borrowers to make their new home just right for them, with tailored improvements, immediately after taking possession of the purchase property, including these costs within their mortgage.

Self-Employed Borrowing Program

This program is designed for self-employed borrowers who do not have a traditional source of income. This allows eligible borrowers with limited documentation to obtain a mortgage with a 10% down payment.

New Construction Program

A multi-stage program designed for those looking to build a custom home.

Cash Back Mortgage

A special mortgage product allows qualified borrowers with strong credit to take a lump sum of cash, between 1-5%, out upon closing. Certain conditions may apply.

Vacation Home/Cabin

A vacation home, second home, or cabin. This product allows qualified borrowers to purchase a second property with an affordable monthly payment with a 5% down payment.

Family Plan

This program enables people to help buy a home for immediate family members with as little as a 5% down payment.

New-To-Canada Program

Qualified homebuyers who have immigrated or relocated to Canada within the last 5 years can purchase property with as little as a 5% down payment.

Borrowed Down Payment

This program helps make it possible for a qualified borrower with strong credit to borrow the 5% needed to purchase a home.

Mortgage Products & Programs

Available for Conventional Mortgages

Rental Purchase

This allows qualified borrowers to purchase a rental property with as little as a 20% down payment.

Home Equity Line of Credit (HELOC)

A HELOC lets you leverage your home's equity which allows the homeowner access up to 80% of the home's equity.

Interest Only Program

A mortgage product where interest-only payments are made. Low payments free up cash flow for other purposes—for example, those who want to access cash for other investment opportunities.