Mortgage Basics

Every financial institution requires you to make a down payment on a new home purchase. Even “no down payment” mortgages require a down payment, it just means that the financial institution lends you money or gives it to you in some form of “cash back”. These types of mortgages typically involve large fees, higher rates and not everyone can qualify for them. The smallest down payment a purchaser can make is 5% of the purchase price. The money for the down payment can be cash you have saved, RRSPs (see www.ccra.gc.ca for details) or a gift. Parama offers High Ratio mortgages, which require a minimum of 5% down and are insured by CMHC (see https://www.cmhc-schl.gc.ca/en/co/buho/ for details). The costs associated with this type of mortgage are typically higher than a conventional mortgage as the borrower is responsible for covering the insurance premium and HST, which is payable to the mortgage insurer, not to Parama. The insurance premium can be added onto your mortgage amount and calculated into your regular payments. Please note that Parama does not charge a higher rate for High Ratio mortgages. If you can make a down payment of 20% or more, your mortgage will be considered a Conventional mortgage, therefore no additional outside premiums are required. You will, however, be responsible for the cost of the appraisal (if required) and legal fees.