Just a reminder that the CMHC is rolling out new fees starting this Friday March 17, 2017. The Canadian Mortgage and Housing Corporation will start charging higher premiums in order to insure their mortgages.
Currently buyers who choose to buy a home with less than 20% of a down payment are required to pay a mortgage default insurance. This insures the lender in the case that the borrower defaults on their loan. The premium is based on the size of the loan and the amount of the down payment.
This is the first change CMHC has implemented since 2015, when they increased the size of the required down payment on homes over $500,000. The new premium will not effect existing loans or those who have an application approved before March 17, so any new mortgage applications after Friday will take the new increased rate. According to CMHC the new rate will be based on the loan to value ratio of the mortgage.
So what does this mean for you as a homeowner? Here is what you can expect:
A $250,000 mortgage will see an increase of approximately $4.70 a month with a minimum 5% down payment
A $350,000 mortgage will see an increase of approximately $6.59 a month with a minimum 5% down payment
A $850,000 mortgage will see an increase of approximately $40 a month with a 15% down payment
If you have any questions regarding these new rates or would like to get more information please don't hesitate to contact me at 780-266-6936. I make myself available at all times.