Last week, CMHC’s recently announced mortgage loan insurance premium increase went into effect.
Who will these changes affect?
The increase affects three main groups of mortgages:
- Owner-occupied properties
- Self-employed property owners
- Rental properties of 1–4 units
If you already own a home and have mortgage insurance, these changes won’t affect you.
Why are they changing premiums?
When CMHC announced the increases, they indicated that their purpose was two-fold: reduce taxpayer exposure to the housing market, and stability the financial system long term.
How much will I have to pay?
So, what’s the bottom line? Well, the average homebuyer should see only about $5 tacked onto the monthly mortgage payment. Compare the effect the new premiums will have.
| Loan-to-Value Ratio | Standard Premium (previous) |
Standard Premium (new) |
|---|---|---|
| Up to and including 65% | 0.50% | 0.60% |
| Up to and including 75% | 0.65% | 0.75% |
| Up to and including 80% | 1.00% | 1.25% |
| Up to and including 85% | 1.75% | 1.80% |
| Up to and including 90% | 2.00% | 2.40% |
| Up to and including 95% | 2.75% | 3.15% |
| 90.01% to 95% | 2.90% | 3.35% |
Notice above that the higher your downpayment, the less impact the new premiums will have on you. For example, if you put down 35% of your mortgage, you’re premiums will go up be only 1/10 of a percentage point.
If you have more questions regarding the new premium increase, contact us today. Remember, we provide free consultation to home buyers.