Mortgage loan insurance helps protect lenders against mortgage
default and enables consumers to purchase homes with a minimum down
payment of 5% with interest rates comparable to those with a 20% down
payment. Mortgage loan insurance is typically required by lenders when
homebuyers make a down payment of less than 20% of the purchase price.
Effective May 1, 2014, CMHC is increasing its homeowner mortgage loan
insurance premiums to reflect its increased capital targets. The
increase applies to mortgage loan insurance premiums for owner occupied,
self-employed and 1-to-4 unit rental properties, including low-ratio
refinance premiums.
For the average Canadian homebuyer requiring CMHC insured financing,
the higher premium will result in an increase of approximately $5 to
their monthly mortgage payment. This is not expected to have a material
impact the housing market.
Effective May 1
st, 2014, CMHC Purchase (owner-occupied 1 – 4 unit properties) mortgage insurance premiums will be:
| 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% |
*CMHC mortgage loan insurance premium is calculated
as a percentage of the loan based on the loan-to-value ratio. The
premium can be paid in a single lump sum but more frequently is added to
the mortgage principal and amortized over the life of the mortgage as
part of regular mortgage payments.
**For loans with a loan-to-value ratio of 80% or
less, the premium surcharge for every five years beyond the 25 year
standard amortization period will increase from 0.20% to 0.25%.
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.
http://www.cmhc-schl.gc.ca
www.philrom.com
