CMHC Premiums on the Rise
This week the Canadian Mortgage and Housing Corporation announced that effective May 1st, 2014, the cost of insuring a mortgage will increase. More than likely this will mean that its competitor, Genworth Canada will follow suit as well.
But let me talk turkey for the "average" and or first time North Bay buyer. I will use a $230,000 purchase point as this is close to the average sale price for the North Bay market last year. For those buyers that have 5% of the total purchase price to put down or a 95% "loan-to-value', the increase in premium goes for 2.75% of the amount borrowed to 3.15%, which equates to an increase from a premium of $6,009 to $6,883. This amount is traditionally funded back into the First mortgage which would result in an additional $4.36 on the monthly premium, plus the purchaser will be responsible for an additional $115 of HST on the premium increase, this amount will be due on closing as the taxes are not rolled back into the mortgage amount.
Not huge numbers, about $50 per year plus that HST hit; but in my mind, money in your pocket is better than in someone else's. So if you are looking currently, you may want to rethink closing dates and this might motivate you to do something before the May 1, 2014 effective date. Not that anything else has been announced by CMHC, but the governments current stand on Canadian's personal dept is, less is best, maybe tighter lending guidelines and criteria are just around the corner as well.
If you require clarification on CMHC, premiums or mortgage rates, please conatct me and I can put you in touch with one of my mortgage specialists.
http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_023.cfm
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20140301/RBCDCMHCFINALATL
But let me talk turkey for the "average" and or first time North Bay buyer. I will use a $230,000 purchase point as this is close to the average sale price for the North Bay market last year. For those buyers that have 5% of the total purchase price to put down or a 95% "loan-to-value', the increase in premium goes for 2.75% of the amount borrowed to 3.15%, which equates to an increase from a premium of $6,009 to $6,883. This amount is traditionally funded back into the First mortgage which would result in an additional $4.36 on the monthly premium, plus the purchaser will be responsible for an additional $115 of HST on the premium increase, this amount will be due on closing as the taxes are not rolled back into the mortgage amount.
Not huge numbers, about $50 per year plus that HST hit; but in my mind, money in your pocket is better than in someone else's. So if you are looking currently, you may want to rethink closing dates and this might motivate you to do something before the May 1, 2014 effective date. Not that anything else has been announced by CMHC, but the governments current stand on Canadian's personal dept is, less is best, maybe tighter lending guidelines and criteria are just around the corner as well.
If you require clarification on CMHC, premiums or mortgage rates, please conatct me and I can put you in touch with one of my mortgage specialists.
http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_023.cfm
https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20140301/RBCDCMHCFINALATL
