There are many great Calgary area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a list of Featured Properties so you know what buyers will pay for your home in today's market. You may also call me at (403) 660-6200 for a FREE home buying or selling consultation to answer any of your real estate questions.
Traditional mortgages are pretty easy to understand. You take a down payment, make an application, and use the down payment toward the purchase price of your home. If you mortgage 80% of your home, you have 20% down on the purchase price. Anything less than 20% down will require you to pay insurance to the government for your mortgage. The government will tack on an insurance premium up to 3.5% of the mortgage amount, which could add up quickly.
Let's say you have a $100,000 home and an $80,000 mortgage. Since you put 20% down, the government will not charge a premium. If you put only 5% down, however, and have a $95,000 mortgage, you will have to pay that 3.5% on your mortgage. Because of this, your mortgage payment will be $98,500. You're essentially paying more for the same amount of home.
If you can't afford to put that 20% down, there are options available to you other than the traditional mortgage. Using a home equity line of credit on your residence gives you greater flexibility and allows you to do things outside of your residence for investment purposes. It's not risky, but simply another form of mortgage on your property that may not be as costly as a traditional mortgage.
If this is something you might be interested in, or would like more information on, don't hesitate to reach out to us. We'd be happy to help you explore your options!
