Buying a home with no money down (Zero Down) is no longer available. Or is it?

Buying a home with no money down is no longer available.  Or is it?
One of the first products that the government of Canada took off the shelf after the banking crisis was the ability for mortgage insurers like CMHC , Genworth and AIG to insure mortgages with no money down.  A deadline of October 13, 2008 was given for these types of mortgages which caused for many to feel the pressure of purchasing a home with no money down.  As a result these people, in most cases, ended up frantically looking for a home before their approvals expired and they were no longer able to buy their home.

As a matter of fact, the ability to buy a home with no money down is still available, it's just not as straight forward as it use to be and there are only a few lenders that are still doing it.  Today, buying a home without any money is done through the use of a cash back mortgage.  Simply put, you get approved for financing with 5% down.  On closing, the lender provides your lawyer a cash back incentive of 5% (the amount of the incentive can vary between lenders) and this incentive cash is then used as your down payment.  This has the same effect as buying a home with no money down. But beware of the interest you will pay on the whole of your mortgage. It might be as high as 1.5 points, which equates to 7.5% more cost in a 5 year term, that means that your 5% cash back that was say $20000.00 cost you $30000.00.   
Now that is  something to think about.

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Shayzaad Kassam

Shayzaad Kassam

CENTURY 21 Millennium Inc., Brokerage*
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