The total mortgage is automatically calculated for you, taking into account the purchase price (Home price) and subtracting your down payment.
However, as you may know, if your down payment is less than 20%, you will need to insure the mortgage. This type of scenario is often called "High Ratio", as opposed to "Conventional" when you have 20% or more down payment.
This mortgage insurance, also called mortgage default insurance (MDI), protects lenders if you ever default on your mortgage (god forbid). :(
Three organizations in Canada insure mortgages. The most famous insurer is a crown corporation called CMHC / SCHL (Canadian Mortgage and Housing Corporation). The other two are Sagen and Canada Guarantee.
If your mortgage needs insurance, the app automatically calculates and adds the premiums to your total mortgage. The mortgage payments are then re-calculated using the new principal amount.
CMHC has specific guidelines for insuring mortgages. We have done all that research and implemented the rules into the app.
All you need to do is specify a home price and your down payment, and the app will tell you when:
- Insured - Insurance is required; the app has calculated it and added it to the mortgage.
- Uninsured - Insurance is not required. Usually, when you are over 20% down
- Insurable - Insurance requirements are met, but because you have 20% down or more, it's optional.
We hope you enjoy crunching these complex rules with our easy-to-use tools.
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