How to obtain a zero down payment mortgage in Canada
 | It hasn't been easy for prospective Canadian home owners to get zero
down payment mortgages since 2007 or 2008. Officially, prospective home
buyers need at least a 5% down payment - and with a sluggish
international economy, Canadian lawmakers could be set to restrict
borrowing requirements even further. However, it is still possible to
obtain a mortgage without a downpayment in one of two ways.
Zero down payment mortgage Canada First of all, some lenders offer 'cash back mortgages', where the bank bundles a mortgage for 95% of the value of the property with a line of credit for the remaining 5%. Additionally, it is possible to obtain a line of credit before obtaining the mortgage, simply transferring the line of credit funds into a chequing or savings account and leaving it there for 3 months prior to taking out the mortgage. For the home buyer, this basically works the same as a zero down mortgage, but ends up costing more than a conventional mortgage. This is still the best way to go for a first-time home buyer in Canada who doesn't have the cash on hand to purchase an ideal property. Also, because the line of credit is a different borrowing vehicle than a mortgage, the new home owner will technically start off with 5% equity in the property they purchase. With some of the lowest interest rates ever seen, and little chance of them rising in the near future, this is a great way to jump into the property market. Here is an example of how a Canadian home buyer could put this strategy to use, purchasing a $200,000 house: 1. The bank or credit union lends 5% ($10,000) as a down payment. Your payments would be roughly $150 a month on that in order to pay back the bank over the next 5 years. Your interest rate on that works out to roughly 5%. 2. The bank or credit union gives you $190,000 mortgage for the condo and the payments are roughly $930 per month. The interest rate is around 4.0%. 3. You still need to show the bank you have 1.5% of the purchase price in the bank in order to pay for notary fees and moving costs. 4. You end up paying $150 $930 = $1080 per month for your new home; this is higher than you would with a 5% downpayment, but not by much! Zero down payment mortgage Canada For more information on mortgages and to receive a free report on factors that affect a mortgage loan, please visit http://www.zerodownpaymentmortgageincanada.com |
