If you want to buy a home but you don’t want to have to pay private mortgage insurance, a piggyback mortgage might be the answer. Say you have 10% down, but need 20%. What you can do is go to a private mortgage lender for the other 10% down and then go with your usual lender for the rest of the home. You can repay that 10% mortgage fairly quickly and you won’t be stuck in home owner limbo while you try and get up the rest of your down payment.
20% Down Payment Saves You from PMI
The larger your down payment happens to be the better. The minimum for most mortgages will be 20%; anything less than that you could end up stuck in the third ring of PMI. If you can go with a piggyback mortgage to cover the extra that you don’t have, you’ll be able to forgo PMI because the other lender isn’t having to put up more than 80% of the value of the home. You’re going to want to be careful about who you work with – when you work with us we’ll help you find the lender that’s best for your situation. Everyone’s different so you’ll want to be careful.
Why is PMI Mandatory on Conventional Mortgages?
PMI is an insurance policy taken out by your lender in the event that you can’t pay your mortgage in full – but unlike the insurance you take out for yourself, they don’t have to pay for it – you do. If you can’t pay your down payment or you just can’t prove that you’re solvent enough to buy a home, you’re going to end up with private mortgage insurance. You can try and get a private mortgage to cover the balance of what you owe, or you can go with a conventional mortgage lender for the majority of your mortgage and then get a piggyback one.
Why Pay More Than You Have to?
It’s important that you save where you can, especially when you first get your mortgage. At the beginning is when you have all the power and you’ll be able to get the most savings. Working with us as your Canada mortgage broker we’ll help you understand where you can save and what you can do to maximise your savings.
Always Work with the Right Lender
It all comes down to working with the right lender – it can be hard to find one that isn’t out to take all for your equity! When you work with us we’ll help you explore all of your options and to find the lender that’s right for you. With so many lenders out there competing for your business, there’s no reason for you to pay too much, so don’t! Call today and see what we can do, after all you only get one chance to get the best deal, so get yours today!
Visit our private mortgages page to learn more!