Month: March 2017

You may have heard that mortgage insurance premiums went up effective March 17, 2017. A lot of people confuse mortgage insurance with life insurance. They are not the same thing. Mainly, mortgage insurance does not protect the consumer; rather it protects the bank’s investment in case of default. The banks look after their interests and will never lose…

With less than 20% down, mortgage insurance is mandatory on a standard purchase. On more “high-risk” programs like Mortgages for Self-Employed or Mortgages for New Immigrants, the bank will insist on having the mortgage insured unless the applicants are in the position to put 35% down.

We have three mortgage insurance companies in Canada:

• CMHC
• Genworth
• Canada Guarantee

All three now raised their insurance premiums.   The curious thing is, the bigger the down payment, the more substantial the hike in the insurance premium. It doesn’t make a lot of sense. It seems like folks who are willing to put more down are getting punished. Please check out the chart below.

How does this affect you? If you already own a home, it will not immediately affect you. However, the statistics say 6 out of 10 families will move in the next 38 months. If your new purchase is with less than 20% down, your new mortgage will need to be insured.  From my experience, folks who sell their home and buy a new one will put more than 5% down. On average, it will be 15% down and this is when they will face higher insurance cost.