Thursday, January 10, 2013

Mortgage Loan Insurance and Premiums

What is Mortgage Loan Insurance?

Mortgage loan insurance is typically required by lenders when homebuyers make a

down payment of less than 20% of the purchase price. Mortgage loan insurance

helps protect lenders against mortgage default, and enables consumers to purchase

homes with a minimum down payment of 5% — with interest rates comparable to

those offered with a larger down payment.

To obtain mortgage loan insurance, lenders pay an insurance premium. Typically,

your lender will pass this cost on to you. The premium is based on the loan-to-value

ratio (mortgage loan amount divided by the purchase price). The premium can be

paid in a single lump sum or it can be added to your mortgage and included in your

monthly payments.

How Much Does it Cost?

The following table provides you with a general idea of the premiums charged by

CMHC. The exact premium will be calculated when you apply for a mortgage and

provincial sales tax may apply.

Premium on Total Loan*

Standard Purchase Premium

Up to and including 65%                   0.50%

Up to and including 75%                   0.65%

Up to and including 80%                   1.00%

Up to and including 85%                   1.75%

Up to and including 90%                   2.00%

Up to and including 95%                   2.75%

Traditional Down Payment                2.75%

Non-Traditional Down Payment        2.90%

CMHC’s online

Premium Calculator can also help you with your estimations.

*The maximum loan-to-value for refinance is 80%. Premium savings may be

available if you are porting an existing CMHC-insured mortgage or if you are using

CMHC-insured financing to purchase an energy-efficient home or make

energy-saving renovations. Ask your mortgage professional or visit

for more details about mortgage loan insurance, such as down payment

requirements, portability, etc.

Amy Wilson

Mortgage Associate

Verico Brokers For Life Inc.
Cell: 780-919-0475

Fax: 18773925092


No comments: