Understanding High-Ratio Insured Mortgages
If you are looking to buy a home in Edmonton with less than a 20 percent down payment, you will need a high-ratio insured mortgage. Commonly referred to as a cmhc insured mortgage, this type of financing allows Edmontonians to enter the real estate market sooner without needing to save a massive down payment.
In Canada, mortgage default insurance is provided by three main organizations:
- CMHC (Canada Mortgage and Housing Corporation):Â The federal crown corporation.
- Sagen (formerly Genworth Financial):Â A leading private mortgage insurer.
- Canada Guaranty:Â Another trusted private alternative.
While many buyers default to the first approval they receive from their bank, getting a second opinion on your high-ratio insured mortgage can save you thousands. If you happen to have a 20 percent down payment or more, you might want to explore a low-ratio uninsured mortgage instead.
How Mortgage Default Insurance Works
Mortgage default insurance protects the lender in case you cannot make your payments. This protection allows lenders to offer highly competitive interest rates even when your down payment is as low as 5 percent.
Here is what you need to know about your CMHC insured mortgage premiums:
- The premium is calculated as a percentage of your total loan amount.
- The smaller your down payment, the higher the insurance premium percentage will be.
- You do not have to pay this premium upfront in cash; it is conveniently added to your total mortgage balance.
- While some provinces require provincial sales tax on the premium to be paid at closing, Alberta currently has no PST.
As an experienced Edmonton mortgage broker, Jason Scott can help you compare options from CMHC, Sagen, and Canada Guaranty to ensure you are getting the absolute best terms for your financial goals.
| Down Payment | Loan-to-Value (LTV) Ratio | Standard Premium Rate |
|---|---|---|
| 5% to 9.99% | Up to 95% | 4.00% |
| 10% to 14.99% | Up to 90% | 3.10% |
| 15% to 19.99% | Up to 85% | 2.80% |
Expert Second Opinions on Your Edmonton Mortgage
Edmonton’s real estate market moves quickly, and having the right financing strategy is crucial. Whether you are a first-time homebuyer or relocating to the city, securing a high-ratio insured mortgage is a major financial step.
We are experts at providing second opinions on high-ratio insured mortgages. Because we have independent access to top lenders, we can review your current pre-approval to see if there is a better rate or product available. A lower interest rate can help offset the cost of your mortgage insurance premium, helping you become mortgage-free faster. Do not settle for the first offer you receive; let us do the heavy lifting to find the perfect fit.
Q1:Â What is a CMHC insured mortgage?
It is a mortgage with a down payment of less than 20 percent, requiring default insurance from CMHC, Sagen, or Canada Guaranty to protect the lender.
Q2:Â Can I avoid paying mortgage insurance in Edmonton?
Yes, if you can provide a down payment of 20 percent or more, you can qualify for a low-ratio uninsured mortgage, which does not require default insurance.
Q3:Â Is Sagen or Canada Guaranty different from CMHC?
While CMHC is a federal crown corporation, Sagen and Canada Guaranty are private companies. All three offer similar insurance products and premium rates, but a broker can help choose the best fit for unique income situations.
Q4:Â Do I have to pay the insurance premium out of pocket?
No, the premium is typically added to your total mortgage loan amount and paid off over your amortization period, so you do not need extra cash upfront.
Q5:Â Why should I get a second opinion on my high-ratio mortgage?
Getting a second opinion ensures you are not leaving money on the table. We review your file to find the lowest rates and best terms, potentially saving you thousands over your mortgage term.
