A high ratio mortgage is a mortgage in which a borrower places a down payment of less than 20% of the purchase price on a home. Another way of phrasing a high ratio mortgage is one with a loan to value ratio of more than 80%. A mortgage with more than a 20% down payment is called a conventional mortgage.
A high ratio mortgage will require mortgage insurance. Mortgage insurance is usually purchased by the lender through one of Canada’s three default insurers, the Canada Mortgage and Housing Corporation (CMHC), Genworth and Canada Guarantee and the cost of the premium is charged to the buyer as a closing cost, or is financed through the mortgage.
What is Down payment?
The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage. The portion of the home price that is not financed by the mortgage loan.
What is Mortgage payment?
A regularly scheduled payment that is often blended to include both principal and interest. This payment can be made weekly, bi weekly or monthly depending upon the bank and what have you negotiated.