CMHC to Increase Mortgage Insurance Premiums on March 17
CMHC (Canada Mortgage and Housing Corporation) will increase its homeowner mortgage loan insurance premiums effective March 17, 2017.
Premiums are calculated based on the loan-to-value ratio of the mortgage being insured. Lenders typically require mortgage loan insurance when a homebuyer makes a down payment of less than 20 %.
The premium can be paid in a single lump sum but more frequently is added to the mortgage principal and repaid over the life of the mortgage as part of regular mortgage payments.
For the average CMHC-insured homebuyer, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment.
For example, if your property was $266,500.00 and you have a downpayment of 5% or $13,325.00, you would have a mortgage of approximately $253,175.00 and need mortgage insurance.
Prior to the increase, your cost for Mortgage Insurance from CMHC would be 3.60% of $253,175.00 or $9114.30.
After March 17, your cost for Mortgage Insurance from CMHC would be 4.00% of $253,175.00 or $10,127.00.
However – this $1013.00 increase is spread out over the life of your mortgage, typically for 25 years. Your increase on a monthly basis will be about $5.10.