Before you buy a home there are a couple things you need to figure out first. One of the very first decisions you need to make is whether you want to work with a mortgage broker who is independent from the bank, or if you prefer, work with a financial representative from a specific bank. Next, you want to find a realtor that best understands your needs and wants.

From there, you and your realtor go through the laundry list of pros and cons as they relate to; type of neighborhood, type of building whether detached or attached, one, two, or three bedrooms, strata operated, resale potential, upgrades needed, local amenities, previous owners, the list goes on. Once you get an idea of the homes that tick the most boxes possible, writing an offer to purchase comes quick.

But what about your mortgage?

Unlike the list of requirements when it comes to someone’s potential home, a lot of people are only concerned about what the interest rate is when looking at their potential mortgage. If your price range was $500,000 for a 2 bedroom and you found one for $480,000, would you write an offer to buy without looking at those other requirements such as neighborhood, resale potential, upgrades needed, inspections, and previous owners?

There is a lot more that goes into a mortgage and understanding what differentiate one mortgage from another is very important for future borrowers to understand. The following are the 5 key elements borrowers need to be aware of before they sign and commit themselves to a lender and their mortgage product:

Privileges
Virtually every mortgage with every lender has some sort of privilege attached to it. A lot of the time it relates to pre-payment privileges. This can be extremely important because it allows you to increase your monthly payments, make lump sum payments, and change the frequency of your payments- all helping to pay down the principle portion of your mortgage and shave years off of unwanted interest. Why this is important to look at is because some lenders may only offer 10% pre-payment capabilities, while other’s 15%, and some 20%. With a $1,800 monthly payment that’s the difference between $180 against principle or $360. With an outstanding balance of $300,000 that’s the difference between a $30,000 lump sum payment against your principle or $60,000- a massive chunk that will take years and thousands of dollars more off your mortgage. Some lenders even offer the ability to skip a payment and double up on a payment.

Penalties
Nobody wants to pay a penalty for breaking their mortgage early (something 2/3 of people do in a 5-year fixed after the 2 year mark). That is why it is crucial for you to understand what your penalty will be IF you had to pay one. Some lenders use an IRD (Interest Rate Differential) penalty that takes into consideration term, outstanding balance, current rates, previous rates, and blends it all together into a formula. Other’s use three month’s interest and as you can probably guess, the IRD penalty is the more expensive one 99% of the time. IRD is usually applied to fixed term mortgages, variable rates more with three-month’s interest penalty. Big banks will almost always have a higher IRD penalty than monoline lenders because their formula accounts for posted rates, something usually much lower and offsetting with a monoline. A $12,000 IRD penalty with a big bank can be only $4,000 with a monoline for the same sized mortgage.

Interest Rate
The lower the rate, the lower than payment (assuming same amortization). What it really comes down to is picking the right term and choosing between fixed or variable, something a mortgage broker can be very helpful in explaining as it relates to your specific situation.

Portable Mortgage
This relates to a borrower’s ability to move their mortgage from one property, to another, even across provincial boarders. Some lenders like those big banks across Canada allow for this while it is harder when it comes to credit unions. If your job requires relocating and constant moving or travelling, this can be a very important factor.

Assumable Mortgage
Similar to portability, an assumable mortgage allows the person buying your home to take it over. This can result in avoiding pre-payment penalties or avoiding increased costs if downsizing. Not a feature commonly used but extremely beneficial when it is available, and you need it.

Connect with a Dominion Lending Centres BTB mortgage professional today to see which of these 5 topics most affects you and what lender offers the best solutions ! Visit our website www.betterthanbankmortgage.com or contact us here   http://betterthanbankmortgage.com/about/contact/ . 

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You may have heard that rates are changing, and that is true. They don’t call it war for nothing and you need an expert by your side!

Think of mortgage brokers as your loyal soldiers. What we are seeing is exactly what we anticipated when prime rate goes up and discounts go down. Confused? Don’t be, variable rates are based on prime and both Bank of Canada Prime and Bank Prime are different.

What the new discount means is what it means – they anticipate prime to go up higher.

With current regulations, borrowers qualify for more mortgages on a variable rates! This is a shift from the previous policy where more Canadians were having to take fixed rates to qualify for the most.

These new discounts on new mortgages getting taken out there discount is lower off of the bank’s prime rate- this does not apply to an existing mortgage.

Did you notice earlier I said the bank’s prime rate, you would think they are all the same… right?

This is not the case. In November of 2016 one Canadian lender broke the trend of their counterparts and raised their internal prime to immediately impact their existing customers by adding to their amortization. This discount below was for new clients, they increased the discount so it looked bigger.

Example
Lender who broke the trend prime     Other lenders prime
3.65 %                                                             3.45%
Discount 1.05                                               Discounts ranging from 1.00-.95%

It’s important to note – each lender has unique criteria to be met to get these offers: some only for purchases, some only with switches, some only certain amortizations, and some only certain property types. The list goes on!

Remember your broker shops all these lenders without bias, while protecting your credit score to assist you in finding the best one. It’s important that we evaluate the following criteria with these lenders- here is an example of three lenders:

Lender one
• Bank has a higher Prime than anyone else
• No change to payment
• Increases amortization which can put into effect a trigger clause- cash call in on mortgage or forced pre-payment and other costs such as appraisal at your expense
• Not portable
• Does have a 12 month penalty payback if getting a larger mortgage at new rates! Best one!
• Have to go to branch to lock in and then be subject to their IRD (usually 3-5% of balance pending where you are in your term).
• Based on history this lender is generally the first to raise their rates and last to decrease

Lender two
• Prime rate consistent with all lenders
• Change to payment so amortization doesn’t increase
• NO trigger clause
• Have to go to branch to lock in and face large IRD between 3-5%
• Not portable but will refund you within 6 months if the mortgage is larger and will get rate available at that time

Lender three
• Prime consistent with all lenders
• Change to payment so amortization doesn’t increase
• NO trigger clause
• lender will pay back penalty within 3 months of getting a larger mortgage with them
• your mortgage expert can assist you with lock in
• If you lock in they have the lowest penalties in the country to break your mortgage in the future, generally 1-1.5% of the balance

With seven-in-10 mortgages breaking before the term is over, this should be weighted very carefully.

Let me demonstrate the following:

A mortgage that gets locked in with first or second lender above at $500,000, by the third year the cost to break a mortgage will be between $15,000 and $25,000. With the third lender the cost would be between $5,000 and $7,500.

What to do with this info?

These new wars apply to new mortgages. If you have a mortgage with a discount less than .50, a renewal upcoming, looking at accessing your equity for home renovations or to consolidate debt and you have a variable rate, it may be time to run the numbers to see if taking a new variable rate mortgage is beneficial for you. One of the significant benefits of having a VRM is to get out at any time with only three months interest penalty (unless a restrictive product was taken for a better rate or had a sale only clause).

As you can see we have only scratched the surface in terms of the differences. There are many other differences and mainly you have to consider as a consumer, do you want to be calling a bank branch and play Russian roulette with the education level and sales goals of the person who guides you through deciding what to do with your biggest asset? Or would you rather have a mortgage professional who is in the front lines proactively guiding you and assessing the economic factors to give you personalized advice based on their experience and knowledge of the mortgage industry.

Depends on what you value most!

Do you have questions on how we can help you? Call Michael Distefano Mortgage Agent and Manager of operations DLC BTB Mortgage Solutions FSCO 12039

T 905 357 5366 F 905 357 6654 C 905 246 5363

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It’s hard to look past what’s right in front of you. That can be said for a lot of things in life, including a mortgage.

So it should come as no surprise that roughly six-in-10 homeowners with the standard five-year fixed rate mortgage break their terms within three years. And as brokers, we’ve heard all of the reasons. Some are good and some are less fortunate. There are those who want to leverage recent large increased in property value for investment terms, or they want to get some equity out of their home to do some renovations. In other cases, it can be life events like divorce, new relationship, the kids going off to college, or just paying down some built up credit card or consumer debt. Some people are lucky enough to be in a position to pay off the mortgage early.

In fact, if you’re reading this and have had a mortgage long enough, one of the things listed above has probably come into your life. But they all come at a cost. So as you sit down to either renew or get a new mortgage, take some time to think about the future. Not five months ahead, but five, seven or even 10 years ahead.

If you’re really not sure what the future that far away is going to look like, you need to consider some options before you sign on the dotted line. It could save you money.

If you’re a fixed-rate person, it’s important to understand how your lender is going to calculate the penalty when you break the mortgage.

Big banks calculate penalties based on the discount they gave you off of their posted rates at the time you first got your mortgage. They take their new posted rate for the amount of time you have left in your mortgage (3-years, 4-years etc.), apply the same Discount they first gave you and then calculate how much interest they would lose as the difference between the two for the rest of the term calculated on your current balance. That is your penalty and it can be quite hefty.

But other lenders like credit unions will use the interest rate differential or three month interest penalty.

What can you do? You could sign on for a fixed-year rate for a shorter term, like three years. That just obviously shortens the length of the mortgage. Or you can also consider a variable rate since the penalties to break the term are much lower.

While it may be tempting to just stick with the big bank, you’ll want to talk to a mortgage broker first. Mortgage brokers have access to all kinds of lenders from credit unions to monolines (a monoline is considered a company specializing in a single type of financial service, like a mortgage) which can arrange better terms if you do need to cut your mortgage early.

We are Canada’s largest and fastest-growing mortgage brokerage! Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally. We work for you, not the lenders, so your best interests will always be our number one priority We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.  We can process your mortgage in as few as 7 days. We are the preferred mortgage lender for several of Canada’s top companies. Dominion Lending Centres’ Mortgage Professionals are available anytime, anywhere, evenings and weekends – and we’ll even come to you!

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As expected, the Bank of Canada held rates steady at 1.25% for the third consecutive month but said that first-quarter growth was stronger than expected and that developments since April suggest that higher interest rates will be warranted. The first quarter GDP numbers are out tomorrow morning, and it’s clear the Q1 growth will be above the 1.3% figure the Bank projected in the April Monetary Policy Report. This opens the door for a rate hike possibly as soon as the next meeting on July 11. The Canadian dollar rallied on this news as many feared that the Bank was behind the curve in responding to a recent rise in overall inflation–induced by higher gasoline prices–and very tight labour markets.

Uncertainty remains on the NAFTA front, dampening global business investment. Canadian firms long for a bright and stable resolution of trade conflicts with the U.S., which continues to be elusive. Business investment picked up in the first quarter and the Business Outlook Survey released in late June will give the central bank a window on business intentions before the next policy meeting.

Concerning the housing market, the Bank’s press release noted that “Housing resale activity has remained soft into the second quarter, as the housing market continues to adjust to new mortgage guidelines and higher borrowing rates. Going forward, solid labour income growth supports the expectation that housing activity will pick up and consumption will continue to contribute importantly to growth in 2018.”

Not everyone shares this optimism. The past week’s bank earnings releases show that mortgage originations have slowed considerably from year-ago levels and some have suggested that weak activity will prevail for the rest of the year. The posted mortgage-rate, which is used to qualify borrowers, has risen to 5.34%, making it more difficult for some to gain approval, particularly at the federally regulated lenders. Variable mortgage rates are much lower as the gap between fixed and floating rates has hit historical highs.

Bottom Line: The central bank statement was much more hawkish than expected suggesting we are on target for a rate hike in July and another one is likely in October as well. The Bank of Canada raised rates three times since the middle of last year as the economy moved closer to full capacity. But the Bank has been in a holding pattern since January cautiously waiting to see the results of trade negotiations and the degree of the slowdown in housing. These factors will determine the pace of future rate hikes with the Bank estimating its neutral rate is 3%, more than double the current overnight rate. The Bank will only very gradually approach that level, mindful of the impact on an overly indebted household sector.

DR. SHERRY COOPER

Chief Economist, Dominion Lending Centres 
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.

Some money-saving updates to Canada’s mortgage rules could save you some loot if you’re renewing a mortgage.

Here’s what changed.

In October of 2016, the government banned refinances from being default insured. But regulators allowed lenders to keep insuring transfers. A “transfer” is when you switch lenders to get a better deal, but don’t increase your mortgage risk − as opposed to a “refinance,”in which you may increase your mortgage amount and/or amortization.

But now you can.

“After additional consultation with the Department of Finance and the other mortgage default insurers, we have received clarification that if a prior uninsured loan has already been advanced with an Approved Lender, that loan may be switched to another Approved Lender and insured, regardless of the loan originally being a refinance, purchase or having an amortization greater than 25 years.”

Canada Guaranty explains that this is possible “provided the amount of the outstanding balance is not increased at the time of transfer and the amortization period does not exceed the lesser of the remaining amortization or 25 years.”

Long story short, if you refinanced your mortgage and now want to switch lenders to get a better deal, you get access to Canada’s very best rates (which are insured rates). On the average existing $200,000 mortgage, 20 bps of rate savings keeps almost $1,900 in your pocket over five years.

Here are seven more tips if you’re thinking about switching lenders:

2. A bunch of lenders now let you switch a mortgage and secured line of credit (a.k.a. a “collateral charge”) to a new lender and get the best insurable rates. This wasn’t common until recently. You’ll often have to pay about $1,200 in legal, appraisal and discharge fees to do this, but if you can save more than that in interest, you’re still ahead.

3. If you have a regular mortgage (a.k.a. a “standard charge”) and switch lenders, your new lender will usually pick up the legal and appraisal fee if you go for a three-year term or longer. But you’ll still be on the hook for your old lender’s “assignment” fee (about $250 or more in most provinces).

4. Here’s a simple mortgage rate comparison calculator to see if switching lenders will save you more than your closing costs.

5. Some lenders let you roll up to $3,000 of closing costs into the new mortgage, even if you don’t refinance. That way, you don’t have to be out of pocket for things such as appraisal fees, discharge fees and mortgage penalties.

6. If you switch lenders with an insured mortgage that you got before Oct. 17, 2017, “the mortgage rate stress test requirement does not apply,” CMHC says. In other words, some lenders will only make you prove you can afford payments based on their discounted five-year fixed rate (e.g., 3.49 per cent) instead of the Bank of Canada’s posted five-year fixed rate (e.g., 5.34 per cent). Mortgage brokers know who these lenders are.

These “escape clauses” will result in big banks losing more insurable customers at renewal. As we speak, non-bank lenders are widely reporting spikes in transfer (“switch”) mortgage applications.

On the other hand, banks are retaining more uninsured mortgagors. I’m talking about higher-leveraged borrowers who are trapped because they can’t pass the Office of the Superintendent of Financial Institutions’ new uninsured mortgage stress test. That rule could keep about one in 10 borrowers at the mercy of their bank because they can no longer switch lenders to save money. This is possibly the most short-sighted mortgage regulation of all time, but let’s save that for a future column.

In the meantime, if your mortgage is coming up for renewal give me a call my tips may score you a better deal.  Happy switching…

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
APPLY ONLINE ANYTIME  https://www.beatthebankmortgage.ca

Your credit score is a big factor when you apply for a mortgage. It can dictate how good your interest rate will be and the type of mortgage you qualify for.

Mortgage Professionals are experienced helping clients with a wide range of credit scores so we can find you a mortgage product even if your credit is far from perfect.

The good news about your credit score is that it can be improved:

• Stop looking for more credit. If you’re frequently seeking credit that can affect your score as can the size of the balances you carry. Every time you apply for credit there is a hard credit check. It is particularly important that you not apply for a credit card in the six months leading up to your mortgage application. These credit checks may stay on your file for up to three years.
• If your credit card is maxed out all the time, that’s going to hurt your credit score. Make some small monthly regular payments to reduce your balance and start using your debit card more. It’s important that you try to keep your balance under 30% or even 20% of your credit limit.
• It’s also important to make your credit payments on time. People are often surprised that not paying their cell phone bill can hurt their credit score in the same way as not making their mortgage payment.
• You should use your credit cards at least every few months. That’s so its use is reported to credit reporting agencies. As long as you pay the balance off quickly you won’t pay any interest.
• You may wish to consider special credit cards used to rebuild credit. You simply make a deposit on the card and you get a credit limit for the value of that deposit. They are easy to get because the credit card company isn’t taking any risks.

Contact a Dominion Lending Centres BTB Mortgage Solutions Mortgage Professional if you have any questions 905 357 5366. www.beatthebankmortgage.ca

DLC BTB Mortgage Solutions  Niagara largest Mortgage Broker 106- 5017 Victoria Ave Niagara Falls L2E4C9
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Refinancing a home is one of those things where people understand what it is but have trouble explaining how it works. To put it simply, refinancing your home allows you to access the equity you have built up, by changing the mortgage amount.

Let’s say you bought a $300,000 condo and you paid 20% ($60,000) as your down payment and had a mortgage of $240,000. Over the next 4 years, you continue making payments and pay down the $240,000 you owed and now that amount is only $230,000. Your mortgage is up for renewal in a year, but you want to do some renovations and you need to access the equity in your home- this is where a refinance could come into play.

What this means is you will get an appraisal of your current home and submit that to a lender. Let’s say your $300,000 condo is now worth $350,000 and you owe $230,000. You have built up an additional $60,000 in equity ($350,000 – $230,000 owing – $60,000 initial down payment= $60,000). You have a mortgage of $230,000 on a home worth $350,000, therefor your equity in the home is $120,000.

To access that $120,000, you can refinance your mortgage. So let’s say you want to go back and take $50,000 from the $120,000 you have built up. Your new mortgage would go from $230,000 to $280,000, and that $50,000 is going to go from the lender to you. You are borrowing money from the lender, but adding that money back on top of your mortgage.

This is why people will refinance their home to make larger purchases. The bank will lend you the money now and get it back in the future, plus interest, because it is being added to the mortgage.

This is just one way people are able to use their home to access cash. Other ways people can do this, especially if they are looking to complete renovations, is through home equity lines of credit, collateral charges, and purchase plus mortgages. Knowing this before you buy can be extremely beneficial, that is why it is important to work with a qualified Dominion Lending Centres broker. Give us a call at 905 357 5366 or visit us online at www.beatthebankmortgage.ca !

DLC BTB Mortgage Solutions FSCO 12039
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106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363

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A surge in mortgage renewals, rising interest rates and new stress testing rules are conspiring to make refinancing your mortgage more complicated and more expensive.

Mortgage broker Kelly Wilson, co-owner of the Wilson Team mortgage brokerage in Ottawa, says a majority of Canadians renew with their same lender, but it’s still important to check out your options.

“If you can save yourself 30, 40, 50 basis points, it’s going to save you thousands of dollars over the next five-year term,” Wilson says.

Around 47 per cent of all existing mortgages will need to be refinanced this year, according to CIBC estimates, up from the 25 to 35 per cent range in what the bank says is a typical year. It attributes the increase to the unintended consequence of regulatory changes in recent years.

The surge in renewals comes as mortgage rates have started to move higher.

Several of Canada’s big banks have raised their posted rates for mortgages in recent days, while special offer rates have been trending higher since last summer.

Offers for five-year fixed mortgage rates have moved north of three per cent in recent weeks compared with under 2.5 per cent a year ago, according to rate-watching website Ratehub.ca.

Wilson says that means if you’re renewing at a higher rate than you’re currently paying it will mean your mortgage payments rise, assuming the amoritization period remains the same.

Homeowners with uninsured mortgages who stretched themselves to the limit when they bought their home and are looking to renew their mortgage may also face additional challenges.

Under the rules brought in at the start of the year, if they are looking to change their lender when they renew their mortgage they may have to face a new stress test.

That means, for some borrowers, it may not be possible to move their mortgage to a different bank, leaving them with less power to negotiate with their current lender.

Wilson also says if you have a home equity line of credit, it may cost you a little more if you want to move your mortgage, even if you don’t have an outstanding balance on the line of credit.

“You might save on the rate, but because of the fees you might not be able to move around,” she said.

Grant Rasmussen, CIBC’s senior vice-president of mobile advice, recommends you start doing your homework up to six months ahead of your actual renewal date.

He says that means talking not just with your lender, but also with your financial adviser to get an updated look at your expenses and income and how that may have changed since you first obtained your mortgage.

“It’s important to make sure you do the math and you feel like you’ve figured out how can I do the best for my family,” he said.

He notes that starting early may allow you to lock in a rate, which could save you a few bucks if rates continue to rise this year.

You will also have to weigh the decision of a fixed versus a variable rate mortgage. While the variable-rate offers are lower than the fixed-rate offerings, the Bank of Canada has raised its influential overnight rate target _ which affects variable rate mortgages _ three times since last summer and suggested it is on the path to higher rates.

“How comfortable are you with risk and how much peace of mind do you want? That’s a trade off,” Rasmussen said.

But whatever your situation, he stressed to start early.

“You don’t want to end of feeling time pressed and feeling like you have to make these decisions without really mapping out a plan.”

Researching renewals is imperative call our team for expert advise at 905 357 5366 Dominion Lending Centers BTB Mortgage Solutions 5017 Victoria Ave Niagara Falls www.beatthebankmortgage.ca  Niagara Largest Mortgage Broker !

Copyright The Canadian Press

Canadian household debt compromising banking system, warns Bank of International Settlements

By The Canadian Press 12 Mar 2018  Armina Ligaya

Canadians’ collective household debt has climbed to $1.8 trillion as an international financial group sounds an early warning that the country’s banking system is at risk from rising debt levels.

Equifax Canada said in a new report Monday Canadian consumers now owe $1.821 trillion including mortgages as of the fourth-quarter of 2017, marking a six per cent increase from a year earlier.
Although 46 per cent of Canadians reduced their personal liabilities, roughly 37 per cent added more debt in larger amounts on average, according to the credit reporting agency’s latest report. In turn, the average amount of personal debt increased 3.3 per cent to $22,837 per person, not including mortgages.
“Despite the high debt, mortgage payments are generally on time, which could be attributed to low unemployment numbers and mortgage and auto finance interest rates which are still at historically low and reasonable levels,” said Regina Malina, Equifax Canada’s senior director of decision insights in a statement released Monday.
The fresh numbers come as an international financial group owned
by the world’s central banks says Canada’s
credit-to-gross-domestic-product and debt-service ratios show early
warning signs of potential risk to the banking system in the coming
years.
The latest report by the Bank of International Settlements (BIS) said Canada’s credit-to-GDP gap and debt-service ratios have surpassed critical thresholds and are signalling red, pointing to vulnerabilities.
BIS, however, cautions that these indicators should not be treated as a formal stress test, but as a first step in a broader analysis.
The country’s credit-to-GDP gap is 9.6, above the group’s critical red zone threshold of nine. This indicator measures the gap between the country’s credit-to-GDP ratio and the overall long-term trend over time _ a widening of which can indicate a possible financial imbalance. Canada is one of four countries in the red zone on this metric along with Hong Kong, China and Switzerland, at 30.7 per cent, 16.7 per cent and 16.3 per cent, respectively. The United States, for comparison, is -6.9.
As well, Canada’s debt-service ratio, which measures interest payments and amortizations relative to income, is at 2.9 per cent. That surpasses BIS’ critical threshold on this measure of 1.8 per cent. Canada is one of five countries in the red on this metric, again along with Hong Kong and China at 6.9 per cent and 5.1 per cent, respectively. The debt-service ratio in both Russia and Turkey were also showing signs of risk, at 1.8 per cent and 6.1 per cent, respectively.
“Canada, China and Hong Kong SAR stand out, with both the credit-to-GDP gap and the DSR flashing red,” the international body said in its report, released Sunday. “For Canada and Hong Kong, these signals are reinforced by property price developments.”
The Canadian PressVisit our website at www.beatthebankmortgage.ca for more valuable information.

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Mortgage Insurance Premiums. Many people know what they are- an extra cost to you the borrower. But not many people realize how they are calculated. Understanding the premium charges and how they are calculated will help lead you to making smarter down payments.

• 5%- 9.99% down payment of a purchase price is a 4% premium
• 10%- 14.99% down payment of a purchase price is a 3.10% premium
• 15%- 19.99% down payment of a purchase price is a 2.8% premium

So, that means with a $300,000 purchase price and a $30,000 down payment (10%), you would have a 3.10% premium added to your mortgage, making your total mortgage amount $270,000 + $8,370 for $278,370 total. The $8,370 being 3.10% of your original $270,000 mortgage.

Now let’s say you have a down payment potential of $60,000 and have the income to afford a $350,000 purchase price but you found one for $325,000. Using your entire $60,000 down payment (18.46%), your new mortgage amount would be $272,420, where $7,420 of it represents the mortgage insurance premium.

But what if you change that $60,000 (18.46% down payment) to say $48,750 and have a down payment of exactly 15%? Well, your premium is still the exact same as it would be with an 18.46% down payment because your premium is still 2.8% of the mortgage amount. That means you will now save $11,250 (difference in down payments), while only paying $7,735 in premiums (an increase of $315).

I don’t know about you, but if someone told me I could put $11,250 less down and it would only change my insurance premium by $315, I am holding onto that money. You now have more cash for unexpected expenses, moving allowance, furniture, anything you want. You can even apply it to your first pre-payment against your mortgage and pay the interest down while taking time off your loan. Obviously if cash is not an issue, putting the full $60,000 would be better seeing as you are borrowing less and paying less interest. However, if cash is tight, why not hold onto it and pay that difference over the course of 25 years?

Consult with a Dominion Lending Centres BTB Mortgage Solutions mortgage professional when it comes to structuring your mortgage request with a bank. It is small little things like this that make all the difference. Call us today at 905 357 5366 or toll free 877 357 5366.