If
you are in the market for a new home and you have 10% or less as your down
payment, it is important to note that CMHC will be increasing their fees as of
June 1st. The increase will be approximately 15% of the current rate.
Who is CMHC? They provide default insurance to the banks
which essentially covers the cost of the mortgage should the borrower default.
The rates typically range from .60% to 3.35% and the premium is typically
included in the total mortgage amount. They are funded and regulated by the
Government of Canada and there are also 2 other private insurers – Genworth and
Canada Guaranty.
So what does this mean for you? Let's say you are purchasing
a home for $300,000 with 5% down. Your new CMHC premium will increase by
just under $1350. That is also factored into the total mortgage amount
which is amortized over 25 years. Your mortgage payment would increase by just
over $6 a month at today’s rates*
Although we are given until the end of the month to
submit the applications, many lenders are setting cut off dates several days
before as they cannot guarantee the applications will be processed in time for
the June 1st cut off.
Here
is a great calculator which helps you determine the amount of fees which will
be due http://www.cmhc-schl.gc.ca/en/co/buho/buho_023.cfmm
And
here is a link to their information sheet regarding the increase including
Q&A’s http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_025.cfm
For
information on this or any other mortgage related questions, please feel free
to contact me today.
www.christinebuemann.com
*2.69%
for a 5 year fixed over 25 years
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