Advantages of Bigger Down Payments

As mentioned above, when you put a 25% down payment on your purchase you can avoid the CMHC premium. More importantly the larger the down payment, the lower the amount of interest you will pay over the life of your mortgage. It is important to note that it may not be wise to stretch yourself to increase your down payment and end up borrowing on credit cards or a line of credit at a higher rate.

Reducing the CMHC fees on your purchase

When you require a mortgage for more than 75% of the purchase price of a property, that mortgage must be insured by Canada Mortgage and Housing (CMHC) or GE Mortgage insurance. The premium charged by these company`s decreases as the down payment increases. When you finance your property at 95%, a premium of 3.75% is added to the mortgage. By increasing the down payment to 10% of the purchase price the premium can be reduced to 2.5%. If you can put down 25%, you can avoid any additional insurance fee. Depending on your situation there are ways that you can structure this financing to avoid the CMHC or GE insurance premium.

Bi-weekly and weekly payments

Most mortgages have the option to allow payments to be made on a weekly or bi-weekly basis. This option may be desirable for two reasons. The first is it can save you money as you can expect to pay off your mortgage about 4 years sooner. This can save you dramatically over the life of your mortgage. The other reason why these options are so popular is that if your employer on a weekly pays you or bi-weekly basis you can simplify your budgeting by making the payment line up with the way you are paid.

Renting Vs. Buying

Home ownership is the single most common Canadian dreams. There are two big reasons why home buying is a national passion. The first is that, at least historically, a house has been a good long-term investment for many Canadians. There's also something undeniably powerful about owning real estate. Unlike other investments such as stocks and bonds, a home is tangible — you can actually reach out and touch it. The second attraction is having a place you can truly call your own. It's yours to fix up as you see fit, nobody can raise your rent, and you put an end to lugging your stuff from apartment to apartment. In other words—The Pride Of Ownership. To decide if buying a home is for you, you need to look at some hard numbers and some softer, lifestyle factors. First, the numbers.

Making Extra payments

Paying extra amounts on your mortgage can make a big interest saving over time. When we select a mortgage company, privilege payments options are something that we look for. A 20% privilege payment will allow you to pay off up to $20,000 per year on a $100 000 mortgage. It is important that the privilege payment also be flexible to allow you to pay smaller payments on the mortgage and as often as you wish. An extra $1000 periodically paid on a mortgage can help you become mortgage free faster.