CMHC Mortgage Insurance Changes
Mortgage before May: Rising mortgage insurance premiums bump up costs
If you’re in the market for a mortgage in Edmonton, and have less than 20 per cent downpayment, then you might want to get that mortgage before May.
For the first time in more than a decade, Canada Mortgage and Housing Corporation (CMHC) is raising premiums for insuring mortgages on Canadian homes: an average 15 per cent. A crown corporation, CMHC is Canada’s largest mortgage insurance provider. Private insurer Genworth has followed suit with a matching increase in premiums.
Canadian homebuyers are required to have mortgage insurance if they have less than 20 per cent equity in their homes. The insurance provides protection for the lender in the case of a default.
How does it hit your wallet? An Edmonton homebuyer with a $248,000 mortgage and a 5 per cent downpayment will pay an extra $5 per month in insurance premiums. We can calculate exactly how much the increase will mean to you.
Will this be the last increase for the next ten years? CMHC expressed plans to announce its premiums in the first quarter of every year going forward. So stay tuned in early 2015 for any more news.
In the meantime, there’s no cause for alarm. But there is a strong incentive for homebuyers in Edmonton to get in touch right away. The change will come into effect on May 1st. Homebuyers will be able to access the current lower rates if they have bought a home and are approved before the May 1 deadline, even if they have a later closing date.
If you’ve got less than a 20 per cent downpayment and are looking to buy this spring, get in touch with us today!