First Time Homebuyer
What the recent CMHC announcement means for you:
Effective on May 1st, the premiums for mortgage default insurance from CMHC will be rising.
What’s mortgage default insurance?
Unless you’re putting down more than 20% on your home, the bank will require that you obtain CMHC protection. This insures that if you fail to pay your mortgage, the bank is still protected.
Who does this affect?
This change affects those who have not yet purchased real estate however plan to do so in the near future with less than 20% down.
How much more will I pay?
The increase to premiums is roughly 15%. As an example, if you are only putting 5% down on your new home, the original charge from CMHC was 2.9%. Effective May 1st, that charge will increase to 3.35%.
Do I pay for this monthly?
No. This extra bit of insurance will get rolled into your closing costs and is often tied into your mortgage.
If you’re not in the market for a new home, then this isn’t relevant news to you however if you are considering a move in the next few months (and have less than 20% to put down) I would suggest not waiting until the “spring market” .