Lower your monthly payment

By :

When you purchase a house with less than 20% down, you’re required to pay mortgage default insurance (CMHC insurance). The premium you pay depends on the size of your down payment – rates drop as you pass the 10%, 15% and 20% marks.

Bryan Freeman, Vice President of CanWise Financial, a brokerage owned by RateHub.ca, suggests in some situations borrowing from a secured source like a HELOC to increase your down payment could save you thousands on CMHC insurance, and lower your monthly payments.borrow-down-payment-exampleIn this scenario, by borrowing $5,000 to bring the down payment up to a full 20%, you’ll not only save $7,290 on CMHC insurance, you’ll also save $55 on your monthly mortgage payment and $1,400 in interest over a 5-year fixed term at 2.49%.