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Loan to Value Mortgages

Created: 24 April 2007
Hits: 3790

Conventional Mortgages Now 80% Loan-to-Value

April, 23, 2007 - Effective immediately, the threshold triggering the requirement to pay high ratio mortgage insurance has changed to a 80% loan-to-value threshold from 75%.

“This is extraordinary news for Canadians,” says Jared Dreyer , of Dreyer Group Mortgage Inc. “This ratio has not changed in over 30 years. In the past, you had to pay an insurance premium if you didn’t have 25% down payment for the purchase of your principle residence. Now you can put less money down (up to 20%) without having to pay any extra fees. We are now inline with the United States, which has the same conventional ratio.”

For Example: Insurance premiums average anywhere from 1.0-1.6% of the mortgage depending upon qualification and mortgage terms. If you required a mortgage of $300,000 and your insurance premium was determined to be 1.5% - by not having to pay the premium, you would now save $4500.00. That is a substantial savings for homebuyers who previously had to scrimp and save for a down payment of 25% to avoid paying mortgage insurance fees.

As lenders disseminate this new legislation, more specific information with regards to individual products and mortgage types will be released. Dreyer Group Mortgages will keep you up to date and informed of these changes as they arise.