20 Mar

Scotiabank STEP mortgage

General

Posted by: Kevin Carlson

Spring and the home and garden show is on its way. If you are considering renovations give me a call about a Scotia STEP mortgage. It allows you to access your home equity with up to 11 different components. Mortgages at full discount rates, secured lines of credit at prime + 1% and even credit cards.

5 Mar

Mortgage insurance premium increase – May 1, 2014

General

Posted by: Kevin Carlson

On February 28th of this year, Canada Mortgage and Housing Corporation (CMHC) announced that their mortgage insurance premiums will be increasing as of May 1, 2014.

 

Most of you know who and what a mortgage insurer like CMHC is, but for those of you who do not, here is a reminder.  There are 3 mortgage insurers in Canada; CMHC, Genworth & Canada Guaranty.  Mortgage insurance is automatically taken out from one of these providers on most every mortgage in Canada where the down payment on the purchase of a home is less than 20%.  This insurance premium is most often added to the mortgage and protects the lender from losses in the event of a default in payments severe enough to warrant a foreclosure.  These premiums are a percentage of the mortgage and based on the percentage of down payment.  The higher the down payment, the lower the percentage of the premium.

The premium increase is across the board no matter how much down payment is being put down.  The highest increases are at the 5% and 10% down payment categories.

 

  

 

  

  

Down Payment

  

  

Standard Premium

  

(Current)

  

  

Standard Premium

  

(Effective May 1st,    2014)

  

Up to and including 20% down

1.00%

1.25%

Up to and including 15% down

1.75%

1.80%

Up to and including 10% down

2.00%

2.40%

Up to and including 5% down

2.75%

3.15%

 

This means that anyone buying a home with less than 20% down payment after May 1st, will most definitely pay more.  Here is a cost increase breakdown of a price range that I most often see clients putting between 5% and 10% down.

 

Purchase price – $250,000.00

5% down payment – $12,500.00

Mortgage insurance premium today – $6,531.25

Mortgage insurance premium after May 1st – $7,481.25

Difference – $950.00

 

Purchase price – $350,000.00

5% down payment – $17,500.00

Mortgage insurance premium today – $9,143.75

Mortgage insurance premium after May 1st – $10,473.75

Difference – $1,330.00

 

Also on February 28th, Genworth announced that they will also increase insurance premiums and they will match exactly to the CMHC changes.  Yesterday the 3rd and final mortgage insurer in Canada posted a news release on their website that they too will follow suit with the changes on May 1st to match the other 2 insurer’s premiums.