Have you ever heard the term Conventional mortgage and High ratio mortgage? If you are not aware of these terms and are thinking to buy a house, make sure to read the article below. In this blog, we will explain the difference between conventional and high-ratio mortgage.
What is a High ratio mortgage?
In High ratio mortgage, mortgagors are bounded to pay minimum 5% down payment. As per the guidelines, any down payment less than 20% is considered high ratio mortgage. If you do not have challenging credit history, have good source of income or you want to get mortgage from the major banks, you must pass the stress test. For more information, you can read about Stress test on our website and how it works. The key to get approval from A lenders is to enjoy the low interest rates.
Additionally, you are subject to purchase Default mortgage insurance, which protects the mortgagee if you stop making monthly mortgage payment or if there is any damage to the property. CMHC, Genworth and Canada Guaranty are the three recognized mortgage insurers. CMHC only insures a house under high ratio mortgage with maximum value of house at 1 million dollars.
What is a conventional mortgage?
In Conventional mortgage, you must pay 20% or more down payment. The benefit of this mortgage is that in most cases, you are not liable to pay the Default mortgage insurance which saves you a lot of insurance premium payment at the time of closing. Also, most conventional mortgages are approved with 30-35 years of amortization period, thereby reducing the monthly payments.
Moreover, you are still required to pass the stress test. These mortgages are favorable for self-employed buyers. There are options for people with challenging credit history, high debt service ratio, past bankruptcies, previous mortgage arrears under Alternate lending (B Lending) program with 20 % or more down payment. For B lending, you can get mortgage from non-traditional sources such as Credit union, Home trust company, tier 2 banks and more. For more information, contact MB Mortgages at 905-458-6929/416-939-7131.
To reiterate, conventional mortgage is the best option for those borrowers who have stable source of income, good credit history and large amount of savings for down payment, whereas if they do not have 20% or more than 20%, opting for high ratio mortgage is feasible. Considering to purchase a home? We would be happy to discuss your options and most suitable mortgage to meet your specific needs.
Why choose us-
As a leading Mortgage Brokerage, we have strong relations with multiple banks and numerous lenders. We work with Canada’s leading lenders to provide you a mortgage solution that fits your budget. Our mortgage and financing process is amazingly simple, we represent you and match you with the best suited mortgage as per your needs. This way we can guide you through this complicated process with our years of mortgage financing experience.
• We are dedicated and professional Accredited Mortgage Brokers in GTA.
• We are well trained and have experience in the mortgage financing field more than 10 years.
• We can shop around with different lenders to get you the best possible mortgage rates and conditions as well.
• We have different options for different income and credit level with access to number of private lenders to suit borrower’s needs.
We are a professional mortgage broker in GTA. We can help you secure a mortgage with best mortgage interest rates. We are located at 2 County Court Blvd., Suite # 438, Brampton, ON L6W 3W8. Call MB Mortgages Inc. today at 905-458-6929/416-939-7131 for your queries or you can email us at: [email protected] or you can visit our website at www.mbmortgages.ca
The information provided in this blog post is intended to provide general information. You should consult with a mortgage professional to fully determine the scope of your situation. MB Mortgages shall not be held liable from usage of the information provided on this page. Individual situation may vary.