Many people don’t know what private mortgage insurance is, much less if they’re going to need it or not. If you’re thinking about getting a private mortgage, talk to us first; we’re experienced Toronto mortgage brokers who can help you find the right financing at the right price! Here we’re going to go over everything you need to know about private mortgage insurance and if you will need it or not.
Why Private Mortgages?
Private mortgages can help people with poor credit, no credit, or those with unique circumstances get the financing they need to buy or refinance their home. There’s nothing new about private mortgages and they’re virtually identical to any other kind of mortgage; instead of getting your financing from a bank you’ll get it from a private individual or company. The interest rates can be a little higher on these types of loans, and that’s where we come in. When you choose us to help you get a good Canadian private mortgage, you’ll be able to get the mortgage for you. Always choose a mortgage broker when looking at this kind of financing!
What is Private Mortgage Insurance?
When you get a private mortgage, you may not be able to get enough money up for your down payment. For conventional mortgages the down payment amount can be as low as 5% interest, but this can vary wildly from one private mortgage lender to another. This will usually stay far below 10%, unless your credit is a problem. We can usually help you figure out where you rate on the credit scale so you can take proactive steps to solve your credit problems before they become a problem for you in the loan process.
But if you can’t meet your down payment requirements, you’ll be required to purchase private mortgage insurance. This means you can put down less of a down payment, but until you’ve paid off 30%+ of your home you will be paying insurance premiums. After this point, you can talk with the lender and have the insurance waived and get out of paying it.
Will You Have to Pay Private Mortgage Insurance?
It’s always a good idea to get pre-approved for your Canadian mortgage (private or conventional!) and this way you’ll know how much financing you’re approved for. From this, you’ll be able to figure out what your 10% – 20% down payment will be like, and you can either save up or decide to just go with private mortgage insurance. Right now mortgage rates in Canada are at the lowest they’ve been, and probably will be, for many decades. You’ll be able to get a good interest rate while it’s still available, and pay mortgage insurance for a couple of years. In most cases it will pay to just do this and save on interest later.
If you’d like to learn more about what we can do for you, contact us today! We can help you sort out what type of financing will work for you.