The cost of carrying a mortgage gets talked about a lot because of high interest rates, but buying a home is a handful as well.
Our mortgage system was designed to promote access to home ownership by helping people get into the market with as little as 5 per cent down on homes priced at $500,000 or less. For more expensive homes, you pay 5 per cent on the first $500,000 and 10 per cent on the rest up to $999,999. At $1-million or more, you must put at least 20 per cent down.default insurance, which can add tens of thousands of dollars to your home-buying expenses.
Another factor is a decline in the use of mortgage insurance by banks on mortgages with 20-per-cent down payments. Banks sometimes buy this insurance on their own to reduce risk. The consumer doesn’t pay in this case. An easy way to help buyers in expensive cities would be to raise the $1-million price cap on homes bought with a down payment of less than 20 per cent. The $1-million limit was put in place in 2012 to limit the potential risk to taxpayers if the economy tanked and mortgage defaults surged. Canada Mortgage and Housing Corp., a federal agency, is a major provider of mortgage default insurance.