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CMHC to increase premiums as of June 1st

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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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Location: 1338 Central Street East, Prince George, BC V2M 3C1, Canada

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