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CMHC - Increases Insurance Fees

For home shoppers actively looking for a new home and unable to put 20% or more as a down payment, there is some urgency to complete a purchase and mortgage application before May 1, 2014.  This is due to mortgage insurance fees increasing on May 1st, 2014.  At the higher end of the market, someone with a mortgage for 95% of the value of their home, the premium will go from 2.75% to 3.15%. On a $450,000 mortgage, the fee — it is charged up front and often added onto the mortgage, would increase from $12,375 to $14,175. 
 
95% Loan-to-Value
Mortgage Amount $150,000 $250,000 $350,000 $450,000
Current Premium $4,125 $6,875 $9,625 $12,375
New Premium (May 1st 2014) $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
Based on a 5 year term @ 3.49% and a 25 year amortization
CMHC states that “CMHC’s new premium rates will be effective for new mortgage loan insurance requests submitted on or after May 1, 2014. In order to be eligible for the current mortgage loan insurance premiums, lenders must submit a request for mortgage loan insurance to CMHC prior to May 1, 2014, regardless of the closing date of the home purchase. As is normal practice, complete borrower and property details must be submitted to CMHC when requesting mortgage loan insurance.”
 
Feel free to contact me with any questions or concerns.  You can also find out more by going to this link: http://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/moloin_013.cfm.
 
Melissa Wood RBC Mortgage Specialist 250-300-4132
 
 --
Alexandra Axsen
Owner/Managing Broker
Lake Okanagan Realty
Tel: 250.870.2792
Fax: 778.484.5252
506 Doyle Avenue
Kelowna, BC V1Y 6V8
Alex@LakeOkanaganRealty.com
www.LakeOkanaganRealty.com

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