Mortgage Insurance Premium in Canada
IjaraCanada is a sharia structuring company. The Islamic methods of our transaction is lease to own transaction. But in Canada as the government rule, all transaction with less than 20% down payment Insurance premium is required.
What is the Mortgage Insurance Premium?
CMHC (Canada Mortgage and Housing Corp) Premium is mortgage insurance covered by the government (CMHC is a government institution), PMI or Private Mortgage Insurance Premium is mortgage insurance covered by a private company. A customer is covered by CMHC if they do a low down payment below 20%.
Less than a 20% down payment is a high-ratio mortgage.
With a high-ratio mortgage lender will need mortgage loan insurance. Mortgage loan insurance lets client buy a home with a minimum down payment of 5%, Mortgage loan insurance required because it protects the lender to obtain CMHC Mortgage Loan Insurance, lenders pay an insurance premium. Typically, lender will pass these costs on to client. Lender will give the exact price when client applies for a mortgage. It will be based on client’s LTV (Loan To Value)
Canadian client can go visit this link for the CMHC insurance premium formula of calculation: