CMHC premiums are increasing as of March 17, 2017. So who does this affect and how will it impact you?
For starters, this will only affect home buyers who are putting less than 20% down. If you're putting 20% or more down, you do not pay CMHC fees.
How it works with CMHC premiums is, the total amount that you would have to pay is calculated based on the loan-to-value ratio of the mortgage being insured. As a home-buyer, you have the option to pay the total premium in one lump sum or adding it to your mortgage principal and re-paying it over the life of your mortgage.
Here is a short calculation explaining the difference in premiums, Based on a 5 year term @ 2.94% and a 25 year amortization.
Downpayment Between 5%-10%
Mortgage Amount $150,000 $250,000 $350,000 $450,000 $550,000
Monthly Increase $2.82 $4.70 $6.59 $8.47 $10.35
You can see that the increase is small, however it is an additional cost you will have to keep in mind when purchasing.
Be sure to discuss all options with your mortgage lender to ensure you are getting the best possible mortgage. And, as always, if you have any other questions about the increased CMHC fees or other real estate related questions, don't hesitate to reach out.
To read the full CMHC report, read this article here.