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CONVENTIONAL mortgages are uninsured mortgages, and that means that you have at least 20% equity to your home, that your mortgage is no more than 80% of the property value.
INSURED mortgages are also called hi-ratio mortgages and need Canada Mortgage & Housing Corporation approval on top of the bank’s approval. There are three mortgage insurers in Canada and we usually just call insured mortgages CMHC-mortgages to keep things simple. If you are buying a home that is under $1 million, you can put down as little as 5% of the property value and mortgage the remaining 95% as long as the property will be owner-occupied by you. But if you are refinancing your home, consolidating your debts, buying a rental /investment property, or a property that is over $1 million, the mortgage insurers cannot insure your property due to the government rules & restrictions. Also, properties that are mixed-use such as part commercial and part residential cannot be insured because insured mortgages are only for 100% residential home-owner use.
The rules, interest rates, and qualifying calculations are different for the two groups. It is harder to qualify for insured mortgages and for that reason they are considered safer than conventional mortgages by the investors, that is the reason why you will also get better-discounted rates for those. Most lenders advertise their best rates in the media rather than four different sets of rates so feel free to contact me any time to find out what the actual rates would be regarding your own situation.
* However, multi-unit residential mortgages (legal duplexes, triplexes, and 4-plexes) can be insured by CMHC as long as one of the units will be occupied by you, and it is a purchase under $1 million.
Your credit rating along with your income also affects your qualification and interest rate, and for that reason, we have different sources for mortgage money such as the major banks, trust companies, credit unions and private money.