It should go without saying that Mortgage loans and housing corporation (CMHC) is one of the finest option for mortgage loan insurance which is to protect a particular bank from you. It is an implication of the fact that even if you fail to pay your mortgage at the required time, the bank would no longer be able to sell your property since the insurance will cover the rest of the amount that you owe.
There is no argument over the fact that mortgage insurance is primarily premised on the fact that it protects the banks, however, it does also provide a number of benefits to the home owners in Canada as well.
The Canadian mortgage loan insurance has an average range that lies somewhere between .5 and 2.9 percent of the overall mortgage. It is to be kept in mind at all times that the rate is entirely dependent on the investment that you can make in the name of a down payment.
The higher the down payment that you are willing to pay, the lower is going to be the insurance rate. In order to give you a better idea, it is of prime importance to mention that if you are willing to come up with a fifteen percent down payment, the rate of insurance is going to be a measly two percent as against the 2.9 percent that you are going to have to pay if you come up with a down payment of only five percent.
Since you must be wondering about the conditions that you are required to fulfill before you can apply for the Canadian mortgage loan insurance via CMHC, it is too indispensable to mention here that while the list of conditions which are to be met are quite a bit, however, some of the conspicuous conditions may include and are not confined to the following:
- You must own a house located in Canada
- You must be willing to pay at least five percent of the overall price of the property as a down payment
- The total monthly housing cost of yours should not be higher than thirty two percent of the gross income of household
- The total debt load that you hold must not be over forty percent of the gross income of household
In the light of the above mentioned information, it is only fair to conclude that Canadian mortgage loan insurance is one of the most commendable options for people who are running low on budget and are unable to come up with the required down payment that makes you eligible for the conventional loan.
The insurance will make sure that you are able to get yourself eligible for the Canadian mortgage loan with a remarkably reduced level of down payment. With such benefits at your disposal, it is highly unlikely that you are going to regret making the decision of going for the mortgage insurance.