No Downpayment? No Problem with the "Free Down Payment Mortgage"

Categories: General
      Date: January 11, 2010
     Title: No Downpayment? No Problem with  the "Free Down Payment Mortgage"

Coming up with a 5% down payment isn’t always easy, especially when you still have to cover closing costs, moving expenses, renovations, and all the other costs that come with buying a home.

No Downpayment? No Problem with the "Free Down Payment Mortgage"

Coming up with a 5% down payment isn’t always easy, especially when you still have to cover closing costs, moving expenses, renovations, and all the other costs that come with buying a home. MyMortgage.ca will direct you to the lender that will pay the 5% minimum down payment on your behalf when you take out an affordable insured 5 or greater term.

The Free Down Payment Mortgage has been developed to assist homebuyers who have established an excellent credit history but have not accumulated the required down payment, or have chosen to use their savings for other asset enhancing purposes. The bank will advance the funds for the mortgage and the required 5% down to the solicitor on the closing date of the mortgage.

The banks Provides the 5% down payment for the Borrower.

Break-Down of Free Down Payment Mortgage Program

Down Payment:

The Bank will advance 5% of the property lending value to the solicitor (Lawyer) on the funding date, in the addition to the mortgage advance.

Mortgage Insurance Premium:

Only 2.90%

Term / Rate:

Posted rates for 5-year term and a 0.5% rate discount for 7-year term.

Eligible Properties:

New (completion only) or existing properties
Purchase transactions, single advance only
Owner occupied single family unit and duplexes
Type A properties

Maximum Loan to Value Ratio:

95%, plus mortgage default insurance premium

Borrower Qualifications:

Applicant must meet banks and Canada Mortgage and Housing Corporation (CMHC)/Genworth Financial Canada (Genworth) lending criteria
Maximum number of borrowers is two
Third-party borrowers and non-occupying guarantors/co-borrowers are not eligible
Minimum Beacon Score 680

Equity Requirements:

Borrowers must have, from their own resources, liquid assets of 1.5% of purchase price to cover closing costs (1% for Genworth insured in Alberta only). These funds should be in place at time of application approval, and cannot be from employer relocation/benefits programs, provincial grants, gifts, etc.
The 5% down payment and amount cannot be included as part of the customer’s assets on the application

GDS / TDS Ratio:

CMHC Insured: GDSR N/A, TDSR 44%
Genworth Insured: GDSR 35%, TDSR 42%

Payment Frequencies:

Monthly, weekly, bi-weekly and semi-monthly

Prepayment Privileges:

15% + 15% prepayment
Match-a-Payment option

Payout Penalties:

Standard payout terms
Free down payment claw back applies if paid out before expiration of term or if mortgage is assumed, paid out of reduced, by an amount in excess allowable each year under the Bank’s standard prepayment options, transferred, rate-blended, or renewed prior to the expiry of the original term.