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
|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.