A guide for home buyers to save on mortgage fees
Canada, 11th April: Are you a home buyer and want to save on mortgage fees? Read this to know more.
Every home buyer wants to save paying whopping mortgage fees. This can be done by exploring different options for down payment.
Option of 20 percent down payment-----
Recently, Canada Mortgage and Housing Corporation (CMHC) has introduced the plan of a minimum five percent down payment to enable relatively young buyers to become home owners. But, it is not feasible since under the CMHC plan, any buyer going for a mortgage plan of less than 20 percent down payment has to pay an insurance premium (that is not fixed) in addition to the remaining principal amount of the mortgage.
If you don’t want to shell out any bucks on payment of mortgage insurance, consider the option of saving the 20 percent down payment if that is possible for you.
But, if, under present circumstances, you can’t afford to go for 20 percent down payments, then following three options are available for you, advises media relations officer with CMHC, Kate Munroe-------
• First is going for a five percent down payment option. For a home buyer putting in $200,000 on his house, mortgage amount will be
$190,000(a 95 percent loan) and the insurance premium for this mortgage amount @ 2.75 percent is $5,225.
• Another choice is going for 10 percent down payment. Under this plan, any home buyer going for a $200,000 home will have a mortgage of $180,000 with a loan of 90 percent. This will result in decrease in the mortgage insurance fee by two percent and the buyer will have to pay $3,600 as insurance premium to be added to the principal amount.
• However, if you, as a potential home buyer, could afford going for 15 down payment, you will have $170,000 mortgage with an 85 percent loan and an insurance premium of $2,975 (at 1.75 percent) to be added on the principal amount.
So, go for larger down payments to lessen your mortgage and reduce amount of insurance premium.