Mortgage loan insurance, an insurance put in place to help protect lenders from mortgage default, is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price.
Effective May 1, 2014, Canada Mortgage and Housing Corporation (CMHC) is increasing its homeowner mortgage loan insurance premiums for applications submitted after May 1, 2014. This increase applies to mortgage loan insurance premiums for owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinance premiums:
|
Loan-to-Value Ratio |
Standard Premium (Current) |
Standard Premium (Effective May 1st, 2014) |
| Up to and including 65% | 0.50% | 0.60% |
| Up to and including 75% | 0.65% | 0.75% |
| Up to and including 80% | 1.00% | 1.25% |
| Up to and including 85% | 1.75% | 1.80% |
| Up to and including 90% | 2.00% | 2.40% |
| Up to and including 95% | 2.75% | 3.15% |
| 90.01% to 95% – Non-Traditional Down Payment | 2.90% | 3.35% |
Using the example of a standard $250,000 mortgage based on a 3.49% rate and 25 year amortization, the monthly mortgage payment after May 1, 2014 would increase by $4.98
|
95% Loan-to-Value |
||||
| Loan Amount | $150,000 | $250,000 | $350,000 | $450,000 |
| Current Premium | $4,125 | $6,875 | $9,625 | $12,375 |
| New Premium | $4,725 | $7,875 | $11,025 | $14,175 |
| Additional Premium | $600 | $1,000 | $1,400 | $1,800 |
| Increase to Monthly Mortgage Payment | $3.00 | $4.98 | $6.99 | $8.98 |
Canada’s other insures, Genworth and Canada Guaranty, will match the new CMHC rates. Rates on niche products, such as self-employed and income properties, will also increase. Contact me for full details on the new mortgage insurance premiums and how it affects you.
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