If you are following the market news, you have probably come across the upcoming changes in the mortgage insurance rules. If you haven’t, here is the skinny:
The down payment for mortgage insurance (meaning; those mortgages which require less than 20% cash down) will be changed to ask a premium of 10% on any portion surpassing $500,000. This is to say 5% for the first $500,000 and 10% for the remaining amount.
For example, if you`re purchasing a $600,000property, the amount of down payment will be:
5% for the first $500,000
10% for the remaining $100,000
Purchase of a $600,000 property Down payment
5% on $600,000= $30,000
5% on $500,000 = $25,000
10% on $100,000 = $10,000
➡ Increase of $5,000
When is this happening?
The change will be in effect as on February 15th 2016. But don’t worry, if you purchased before this date the new regulations will not apply.
If you`re thinking to purchase a property with mortgage insurance, act now and save on the extra 5%. Those few thousands saved can be put to better use: home upgrades, furniture or a well deserved trip!
Take advantage of the low mortgage rates and make your purchase offer before the deadline.
Need assistance with buying? Feel free to drop us a line.
Reference : http://www.fin.gc.ca/n15/15-088-fra.asp
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