What types of mortgage are available?

Conventional Mortgage

This mortgage is for an amount which does not exceed 75% of either the appraised value of the property or the purchase price, whichever is lower. Your down payment is a minimum 25% of the purchase price. Mortgage insurance is not required for this type of coverage.

High-ratio Mortgage

With this type of mortgage, you contribute less than 25% of the cost of the home as a down payment and as little as 5%. A high-ratio mortgage requires mortgage loan insurance. CMHC offers it for a premium of between .5% and 3.25% of the mortgage amount (additional charges may apply). This premium can be added to your mortgage payments or paid in full in closing.

Second Mortgage

This usually has a higher interest rate and shorter amortization than a first mortgage. Secondary financing is often used to make renovations to a home.

Assuming an Existing Mortgage

You take over the vendor's mortgage as part of the price you pay for the house. Assuming an existing mortgage is quick and saves you money on the usual mortgage arragement fees, such as appraisals and legal fees.

When you assume a mortgage, you don't have to arrange financing from another lender and the rate on an existing mortgage may be lower than the prevailing market rate.

Sometimes, if it is specified in the original mortgage agreement, a mortgage can be assumed automatically. If not, you may have to qualify with a lender first.

Vendor Take Back Mortgage

This means the vendor lends you the money to purchase the home. It's basically a second mortgage. For example, on a home that costs $150,000, if the vendor has an existing mortgage of $70,000 that you can assume and you have $40,000 for a down payment, the vendor may lend you the outstanding $40,000 which you pay back monthly.

The vendor may be able to offer this loan at less than bank rates. Some vendors will sell this mortgage to a mortgage broker instead of holding it themselves.