Question:

I don't really know what the best option is for downpayment.

Is it better to hold back some downpayment then make a lump sum payment that goes directly towards the principle?

The 15% and 18% is really not that much different in monthly payements. 20% would be too tight since I would rather hold some money back and put up a fence and eaves.

house price = $316,500

available money = $75,000


17% looks probably the best (at 5.1% 5 years over 25 years)

at 20% down or $63,300 :

$12,000 left over for closing, reno, or emergencies

1% the CMHC insurance is $3,000

$686.34 bi-weekly


at 15% down or $47,500 :

$27,500 left over for closing, reno, or emergencies

1.75% the CMHC insurance is $5500

$729.17 bi-weekly

at 17% down or $53,805 :

$21,195 left over for closing, reno, or emergencies

1.75% the CMHC insurance is $5500

$712.08 bi-weekly


at 18% down or $56,970 :

$18,030 left over for closing, reno, or emergencies

1.75% the CMHC insurance is $5500

$703.50 bi-weekly

Answer:

The best option is the one that best suits your needs. The CMHC/GE Capital Mortgage Insurance premium rate changes with every 5% down payment you make. The difference between 15% and 17% down payment is negligible but the difference between 17% and 20% down payment is .75% on the insurance premium for the overall mortgage. If you put an additional $9.5k down you will save a little over $2k in insurance premium and have $11.5k less mortgage to repay.
I suggest you first determine the level you are happiest with for the down payment, choose an amortization that gives you the highest comfortable payment and go with that. If you find you are at 19% down, you may want to go the extra mile and stretch for the additional savings. Cheers, John Lozinski

Answered By: John Lozinski

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