CMHC Wants More Of Your Money!!

Starting March 17, CMHC started to charge mortgage holders slightly more every month to insure their loans.

By law, anyone putting down less than 20 per cent of the purchase price of a home in Canada must pay mortgage insurance, even though the homeowners themselves don't benefit from that coverage. Rather, it's a fee borrowers pay so if they default on loans, their lenders aren't on the hook. Instead, an insurance payout would cover any defaulted loans.

Here's an example of what it could end up costing the consumer.  Let's take a purchase price of $600,000 and the buyer has a 10% ($60,000) down payment.  That leaves $540,000 to insure.  Right now that premium is 2.40% or $12,960 for a mortgage of total mortgage of $552,960.  Based on an interest rate of 2.69%, the monthly mortgage payment will be $2,529.70.

On March 17, 2017 the premium increased to 3.10% or $16,740 for a total mortgage of $556,740.  The buyer starts off owing $3,780 more and his monthly payment increases by $17.30 to $2,547.00.  

As to why our dear government decided to make it a little more expensive for people to buy a home...Well, we haven't quite figured that one out yet!