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.
