What is a Conventional Mortgage?

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As a Toronto mortgage broker it’s important for me to remember that there is mortgage jargon and terminology that my audience may not be familiar with. When I work with clients I try and make the experience as educational as possible and I always make an effort to step back and explain mortgage terms no matter how everyday and common they may seem.

I was recently asked what a conventional mortgage is?

A conventional mortgage is a mortgage where the loan amount doesn’t exceed 80% of the current market value of your home.  That means if you are purchasing, your downpayment is 20% or more and if you are refinancing your home you are not financing more than 80%.  A conventional mortgage is a mortgage that doesn’t need to be insured by CMHC or another Canadian mortgage insurer.

If your down payment is less than 20% or you are financing more than 80% of the value of your home then the mortgage is considered to be high ratio and requires mortgage insurance.

Check out my video where I explain it in further detail.

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chris

Christopher is a second-generation mortgage broker. Following in his dad’s steps, he helps borrowers demystify mortgage financing. Christopher lives in Toronto and when he is not in the office you’ll find him sailing on Lake Ontario.
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