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
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
www.cmhc.ca
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
yourmortgagegirl@gmail.com
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