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:

  1. Owner-occupied properties
  2. Self-employed property owners
  3. 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
Standard Premium
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.