What you need to know about CMHC’s changes to insurance rates

Canada Mortgage and Housing Corporation (CMHC) recently announced an increase to their default insurance rates. If you purchase a home to live in, if you’re self-employed, or if you purchase a property with 1–4 units, and you put down less than a 20%, you must have your mortgage insured against default. The premium charged for that insurance will increase to as much as 3.15% of the amount borrowed from 2.75%. So if you take out $250 000 mortgage, you will have to pay an additional $1000 over the life of your mortgage. This, of course, will increase your monthly mortgage payment. The good news is that this doesn’t come into effect until 1 May 2014. As long as you arrange your mortgage prior to 1 May 2014 (closing date can be later), you won’t be subject to this increase. Interest rates are still low and house prices continue to slowly rise despite sales being down slightly over the last couple of months. According to the latest House Price Survey from Royal LePage, “Prices are expected to maintain healthy momentum into 2014, with Royal LePage projecting a 3.7 per cent increase nationally from 2013”. If you have questions about the insurance rate changes or you would like to arrange a mortgage soon, contact Mortgage Design Group today.