Mortgage Glossary

Downpayment

The amount of money that you are paying towards the purchase of your home is called the downpayment. This is also known as the 'equity' that you will have in the property. You should have a good idea of how much you have before talking to your BC Mortgages broker.

You will have to show lenders proof of your downpayment - for example: if it is in a savings or investment account, or an RRSP, most lenders will require proof that you have had the funds for three months. This can be done by taking current account statements with you.

If it is a gift from a family member, you will eventually have to get them to sign a letter saying that the money is a gift and not to be repaid. You will also need to show proof that they have the funds and the funds must be transferred into your account prior to closing date. One way to avoid all of this is to receive the gift, and deposit the funds into your account at least 3 months prior to you even looking for a mortgage or house.

Normally the minimum downpayment allowed is 5% of the accepted purchase price (or appraised value, whichever is lower). However, the less money that you need to borrow, the less you will have to repay!

If you have less than 25% as a downpayment then you have a High Ratio Mortgage and if you have more than 25% as a downpayment then you have a Conventional Mortgage.

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