One cost that can be overlooked by home buyers is mortgage default insurance.
So, what exactly is mortgage default insurance and why do you need it?
If you’re buying an owner-occupied home with less than 20% down payment, you are required to purchase mortgage default insurance in order to arrange your financing. When buying a rental property, some lenders require you to purchase this insurance if you put down less than 35% towards your purchase.
As real estate values in Metro Vancouver continue to soar, many home buyers, especially first time home buyers, often have less than 20% of the purchase price available as a down payment. The average price of a new home is now well above $500,000 meaning a 20% down payment can easily exceed $100,000. This is a lot of money for most people and it’s understandable why many fall short of this 20% down payment.