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CMHC to increase premiums starting May 1st

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The mortgage world has patiently been awaiting CMHC’s announcement this morning. They recently announced that they will be increasing their premiums for mortgage loan insurance as of May 1st, 2014.

Mortgage loan insurance is mandatory in Canada if you have less than 20% down. Many lenders also purchase the insurance where the borrower has more money down and they cover the cost to minimize their exposure to risk. The premiums typically range from .60% to 3.35% of the total mortgage amount and it is generally included in your mortgage.  

So what is mortgage loan insurance? It basically protects the lender in the case that the borrower defaults

The example provided on the CMHC website is for a $250,000 mortgage at 3.49% with 5% down and a 25 year amortization. With the rate premium increase, the mortgage insurance premium on this loan would increase by $1000 and the borrower’s monthly payments would increase by approximately $5 a month.

For more examples and for the full press release you check out CMHC’s site here
 
For more information on this or for any mortgage information, please feel free to contact me today.
 
http://www.christinebuemann.com
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Location: 1596 3rd Avenue, Prince George, BC V2L 3G4, Canada

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