No down payment mortgage
June 14, 2016 | Posted by: Alex Vinarski
The no down payment mortgage is technically called the CMHC Flex Down. Federal legislation still requires that a down payment of 5% is made, however they are flexible on where that down payment comes from.
Under the program we guide you on setting up a interest only unsecured line of credit with one of our preferred chartered banks. The line of credit balance is fully payable and we suggest that you allocate your planned down payment savings and payoff the line of credit.
The great thing about this program is that the mortgage for the remaining 95% itself operates identically to a non-flex down; same terms, same pre-payments, and best part is you get a fully discounted rate. Downside, CMHC does charge a slightly higher premium of 0.20%, but this only comes to $200 for every $100K borrowed, this premium is a one time fee only and that cost can be added to the mortgage.
While the costs are slightly higher with the Flex they are certainly offset by owning a home now. Based on historical prices if an individual waited two years to save up 5% on a home listed for $300,000 now, and home prices increase by 2% per year for example, it is expected that the home in two years time will cost $312,000 with appreciation. So buying now with the Flex would saves $12,000. In current Vancouver market savings will be much higher.
Hope this helps. Let me know if you have any questions or if you would like to see what purchase price you would pre-approve for.
