Thursday, April 26, 2007

It Looks Like Banks Are Starting To Warm Up To The Idea Of Less Than 25% Down On A Mortgage

It looks like banks are starting to warm up to the idea of less than 25% down on a mortgage. Traditionally those without a large lump sum to put down on a house have had to pay mortgage insurance. Now banks, well one bank anyway, have lowered the limit to 20% down. This will make it easier for some prospective home buyers in Canada to find the home of their dreams. The privilege of owning a home has become easier thanks to a bill passed by our government. Read on.

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New mortgage rules can benefit home owners who have more than just a mortgage

WATERLOO, ON, April 24 /CNW/ - Manulife Bank is 'ready to do business' for Canadian homeowners who have as little as a 20 per cent down payment, with no high ratio premium required. As of today, the Bank's innovative Manulife One account, that includes a client's mortgage as well as other debts, is now available up to 80 per cent loan to value, without high ratio insurance.

New federal legislation that came into effect April 20 moved the minimum down payment requirement from 25 to 20 per cent. Previously, anyone wanting a mortgage greater than 75 per cent of their home's value was required to pay a lump sum premium to a third party insurance company to protect banks from possible loan defaults. This premium ranged anywhere from one per cent to 3.25 per cent of the mortgage amount, based on the ratio of the loan amount to the value of the home.

The change in legislation moved the maximum ratio available without paying a high ratio premium up to 80 per cent and Manulife Bank is among the first banks to offer this benefit to Canadians, and definitely the first to provide it in an account as innovative as their all-in-one account.

"This is great news for prospective homeowners," says Roman Fedchyshyn, President and CEO of Manulife Bank of Canada. "The cost of a mortgage is daunting enough. So, to be able to eliminate this fee for some mortgages, including other debts, means keeping more money in the pockets of our customers. And, that is what Manulife Bank is all about."

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