Downpayments & CMHC
Are you
planning to put less than 25% of the purchase price of your
property down as a downpayment?
If so, you will have to pay the Canada Mortgage and Housing
Corporation to insure your mortgage loan.
That's the bad news. But here's the good news:
Luckily for new home buyers (many of whom typically have a
small amount saved up for a downpayment), CMHC has recently
announced a reduction in the cost of this insurance.
Together with current low interest rates, this change makes
home ownership more affordable than ever for new home
owners.
Since 1954,
CMHC mortgage insurance has helped one in three Canadians
buy their homes, in most cases, their first home. The
Corporation helps Canadians obtain financing to purchase a
home when they have the ability to manage and carry the
mortgage debt, but have less than a 25 per cent down
payment.
All Canadians looking to buy or refinance their homes using
CMHC’s mortgage loan insurance products will automatically
benefit from the reduction in premiums. On a mortgage of
$100,000, this represents a reduction of $500 based on a
five per cent down payment.
Mortgage insurance protects
the lender against payment default by the home buyer. It is
required by most lenders if the home buyer has less than 25
per cent of the purchase price as a down payment. By
providing mortgage loan insurance to lenders, CMHC enables
home buyers to finance up to 95 per cent of the purchase
price of a home.
The following are the new premiums:
| Loan Amount as a % of value of the home (up to & including) |
Premium on total Loan Prior to July 14, 2003 |
Premium on total Loan Effective July 14, 2003 |
|---|---|---|
|
65% 75% 80% 85% 90% 95% |
0.50% 0.75% 1.25% 2.00% 2.50% 3.75% |
0.50% 0.65% 1.00% 1.75% 2.00% 3.25% |
See your lender for terms and
conditions.
