Mortgage Tools
Mortgage Financing up to 100% of Your Home's Value
For those who may not be sure what this type of mortgage is all about, 95% financing refers to the percentage of one's home equity that will be leveraged by either a first or second mortgage loan.
First mortgage loans up to 100% were very common throughout in the new millennium; they are now on the wane. In essence, 95% financing of a home would be a situation where the borrower has borrowed the entire amount of the value of their home, and as such, does not have any equity in the property.
Primarily used by first-time homebuyers in the first eight years of the new millennium, these mortgage loans have been deemed to be too risky both for the borrowers as well as the housing market in general as a result of the mortgage meltdown in the United States in 2007.
While a number of mortgage products are still available that can supply up to 95% financing on either a home purchase or a refinancing project, these loans typically carry a substantial premium on the interest rate relative to 95% financing and as such are no longer affordable. As such, we do not typically recommend such products on a first mortgage unless the situation absolutely warrants such an approach.
Second Mortgage Financing Options
Alternatively, there are still options available as a second mortgage for existing homeowners, which for those with excellent credit and provable income will find an affordable solution compared to high-rate credit card and line of credit payments, and can be a great option of borrowing from your home without breaking your first mortgage.
TIP: When considering a 95% financing proposal, make sure that you think your decision through. If you were to need to sell your home, one might expect a fee of 5% from a realtor in addition to moving costs, etc... and will still need to repay the entire loan amount. As such, these loans are not ideal for those that intend to move from their home within a 2 - 3 year minimum period.
Properties usually appreciate in value over time. A 100% financed property may be at 95% after a year or two because the property has appreciated. Be aware, however, that there is the risk that the property may depreciate, in which case, more money would be owed on the property, than what it is worth on the market.
Ultimately, this limited cushion has been blamed for a high level of foreclosures in the United States in 2007 and 2008, thus Canada's mortgage lenders have been itching to learn from their neighbour to the south and restrict some riskier lending practices in order to protect themselves, and Canada's housing market.
As with any other form of financing, it is important to consult an expert in order to determine the best course of action available to you at any given time. CMI's mortgage agents are standing by to take your call today to discuss your financial situation.
Contact Canada's mortgage experts today for a complimentary consultation on flexible and affordable 95% financing mortgages. Call Us Today at 1 888 465-1432.
