Why put any money down on a home?...Go 100% financing!
With the recent enhancements to 100% financing products which allow for fully discounted broker rates, it is a wonder if there is any benefit to making a down payment on a home if you don't have to. For example:
With 5% down payment - the insurance premium is 2.75%
With 0% down payment - the insurance premium is 3.10%
Taking that into consideration, let's see what difference it makes on a $300,000 purchase.
At 95% Financing:
Purchase Price: $300,000
Down Payment: 5% = $15,000
Insurance Premium: 2.75% = $7837.50
At 100% Financing:
Purchase Price: $300,000
Down Payment: 0% = $0
Insurance Premium: 3.10% = $9300
So, for a premium difference of only $1463 you don't have to make a down payment.
Furthermore, take that $15,000 and deposit it into an RSP. At an average 40% refund rate you would get approximately $6000 back.
Apply that refund back onto the mortgage and not only have you reduced your mortgage amount by $6000 but you also have a $15,000 RSP.
Happy house hunting,
David Shieh
Posted by David Shieh- Abbotsford Real Estate Agent
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