Island Savings Credit Union

Buying a home is one of the biggest decisions you’ll make in your life, and getting approved for a mortgage is an important part of that process.

Mortgages are complicated products, so you’ll want to do your homework before speaking to a mortgage lender.

Finding the Right Mortgage Lender

When you deal with the big banks your mortgage is often referred to a mortgage broker located miles away in another city. They don’t get to know you and your family. You’re just a name on a page. How can these mortgage brokers possibly know what product is best for you?

Island Savings is a locally-based credit union with knowledgeable mortgage lenders located right here in Lake Cowichan. They understand our community and will take the time to find the right mortgage for your needs.

For those who are looking to buy a house in the Lake Cowichan, or anywhere on Vancouver Island, we highly recommend dealing with the mortgage experts at Island Savings.

To get connected with an Island Savings mortgage expert, please call Graeme Service 250-749-6631, or email him at gservice@islandsavings.ca.

For more information go to https://www.islandsavings.ca/Personal/Borrow/Mortgages/MortgageBasics/.

Down Payment

A mortgage down payment is the amount of money you pay upfront when purchasing a home. You will be required to put some money down in order to qualify for a mortgage.

The size of your down payment will determine what kind of mortgage you will have.

• Conventional Mortgage: This type of mortgage is for people with a down payment of 20% or more of the purchase price (or appraised value if this is lower than the purchase price). There are no mortgage insurance premiums with this type of mortgage.
• High Ratio Mortgage: This type of mortgage is for people with a down payment of less than 20% of their house’s value. (The minimum down payment required in Canada, on purchases of less than $500,000 is 5% of the home’s value)*. With this type of mortgage you’ll need to be insured through either Genworth or Canadian Mortgage & Housing Corporation (CMHC) and you can choose to pay the insurance premium in one payment or add it to the total amount of your mortgage. The amount of your insurance premium will depend on how much you need to borrow.

Types of Repayment Plans

When applying for a mortgage you will have two types of repayment options:

• Open Mortgage: An open mortgage can be refinanced or repaid at any time without penalty. However, in return for a higher amount of flexibility you will pay a slightly higher interest rate.
• Closed Mortgage: A closed mortgage has limited prepayment options. If you wish to refinance or pay out your mortgage before the end of your term a penalty will apply. However, a closed mortgage will allow you to pay a slightly lower interest rate.

Types of Rates

Your mortgage rate is the rate of interest charged by your mortgage lender. You will have two types of mortgage rates to choose from:

• Variable Rate: A variable rate mortgage is based on the prime rate. As the prime rate moves up and down so does your mortgage rate. This type of mortgage rate is recommended if you believe rates will be going down.
• Fixed Rate: A fixed rate mortgage has a set rate that will stay the same during the entire term of your mortgage. This type of mortgage rate is recommended if you believe rates will be going up.

Purchase + Improvements Program

Are you interested in buying a home that needs some renovations? Do you not have enough money for both the down payment and your desired home improvements? Island Savings offers a Purchase + Improvements program that will allow you to receive funds for a renovation as part of your mortgage.

Canadians are required to make a minimum down payment of 5% when purchasing a home. By financing your renovations through your mortgage it means you will only be required to pay 5% of the total cost of your renovations up front as well.

For those who can afford a larger down payment, you may decide to use the Purchase + Improvements program to avoid dipping too much into your savings to pay for your renovations.

Here are some examples of what your mortgage down payment would look like with and without the Purchase + Improvements Program:

*For more information about down payment requirements, speak to an Island Savings mortgage expert.