Mortgage Insurance Premiums (MIP) are a significant component of homeownership costsfor many Canadians, particularly those with high-ratio mortgages. Designed to protect lenders against default, MIP enableshomebuyers to secure mortgages with less than a 20% down payment, making homeownership more accessible.
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The cost of MIP is typically calculated as a percentage of the total loan amountand can either be paid upfront or rolled into monthly mortgage payments. While it adds to the cost of borrowing, MIP allows many Canadians to enter the housing market sooner, even in competitive regions.
MIP isn’t permanent—once homeowners build sufficient equity (usually 20% or more), they can eliminate this expense. To expedite this process, homeowners can make additional payments or benefit from propertyvalue appreciation.
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Understanding the role of MIP in your financial plan is essential for long-term success. Working with a knowledgeable lender or financial advisor can help you navigate the process and minimize costs while achieving your homeownership goals.
