Mortgage insurance provides protection for lenders who loan money to have buyers and owners in case of default. The premium for mortgage insurance is typically added to your mortgage balance. Homeowners with less than a 20% downpayment must get mortgage insurance if they are borrowing from a financial institution regulated by the Bank Act.
For a downpayment less than 10%, home buyers currently pay a mortgage insurance rate of 3.15%. As of June 1, that insurance rate will increase to 3.60%.
So what does this translate into in terms of dollars and cents? Genworth noted that for first time buyers with a 95% loan-to-value mortgage of $300,000, the change amounts to a $6 increase in their monthly payment based on a 2.79% interest rate and a 25-year amortization period.
The increase to mortgage insurance rates has been announced by Canada Mortgage and Housing Corporation (CMHC) and Genworth Capital. Canada Guaranty, another private insurer has yet to make an announcement regarding an increase.
When it comes to choosing a mortgage there are lots of local professionals who can assist you in getting the right mortgage. If you’re looking to buy and for a mortgage, we have strong working relationships with many local lenders who can assist you.
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