Ravi Hooda
Realtor (B.com, MBA)

Re/Max Gold Realty Inc.
Brokerage
Independently owned and operated

2980 Drew Rd, Unit 231, Mississauga, ON L4T 0A7

Call: 416-825-5032  Fax: (905) 673-8900  Mobile: 4168255032

CMHC Insurance Premiums To Go Up

April 3, 2015 - Updated: April 3, 2015

CMHC boosts mortgage insurance premiums for buyers with small down payments

15% increase starting June 1 for homebuyers with down payment under 10%

The Canadian Press Posted: Apr 03, 2015 10:29 AM ET Last Updated: Apr 03, 2015 10:30 AM ET

It estimated that for the homebuyer who has less than a 10 per cent down payment and borrows $250,000, the higher premium will result in an increase of about $5.20 to the monthly mortgage payment.

Canada Mortgage and Housing Corp. is raising mortgage insurance premiums for homebuyers with less than a 10 per cent down payment by about 15 per cent, effective June 1.

Premiums for homebuyers with a down payment of 10 per cent or more and for CMHC's portfolio insurance and multi-unit insurance products are unchanged.

The changes do not apply to mortgages currently insured by CMHC.

CMHC says the increase follows an annual review of its insurance products and capital requirements.

It estimated that for the homebuyer who has less than a 10 per cent down payment and borrows $250,000, the higher premium will result in an increase of about $5.20 to the monthly mortgage payment.

The new rate for a loan-to-value ratio up to 95 per cent is 3.6 per cent, up from 3.15 per cent. For a loan-to-value ratio from 90.01 to 95 per cent, but a non-traditional down payment, the premium climbs to 3.85 per cent from 3.35 per cent.

'Detailed review'

"CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio," said Steven Mennill, CMHC's senior vice-president, insurance.

"The premium increase for homebuyers with less than a 10 per cent down payment reflects CMHC's target capital requirements which were increased in mid-2014." The federal agency is the country's largest insurer of home mortgages.Financial institutions generally require mortgage loan insurance for buyers making a down payment of less than 20 per cent.The insurance protects the lenders from defaults, but the costs usually are borne by the borrowers.

Having  Real estate professionals who are not only knowledgeable but passionate about all things related to Real estate & Financing are your best bet when it comes to offering sound advice. If you or someone you know has a question about buying a home or financing contact us anytime.

Please feel free to Call us direct at 416-825-5032 or email us at rhooda@trebnet.com for any further information or book a one on one meeting. 


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