What is a High Ratio Mortgage?
A High-Ratio mortgage is a mortgage which is greater than 80% of the purchase price or appraisal, whichever is less. High-Ratio mortgages require Mortgage Loan Insurance which is provided by either Canada Mortgage and Housing Corporation (CMHC) or Genworth, a private Insurer, and protects the lender against loss.
Mortgage Loan Insurance premiums range from .50% to 3.75% of the mortgage amount and are calculated based on the overall loan to value. For instance, borrowers with a 5% down payment, a loan to value of 95%, would pay a premium of 3.75% while those with a 20% down payment, a loan to value of 80%, would pay an insurance premium of 1.25%.
Mortgage Loan Insurance should not be confused with Mortgage Life Insurance.