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Joe Gaglione and Matthew Gaglione (780) 488-4000


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Mortgage Insurance Fee Increases

What started as an announcement of rate increases by the Canadian Mortgage and Housing Corporation (CMHC) will surely lead to an industry wide change in mortgage insurance costs.  While mortgage insurance is available to a wide variety of lending situations, it is mandatory for consumers who wish to purchase a home with a down payment which is less than 20% of the purchase price.  Not all of the rate increases are equal, and while it is being reported that the average increase will be around 15%, there are different percentages depending on how much of a down payment you are willing to do.

Below is a breakdown of the breakdown of the old and new rates.  The fee is based on a percentage of the mortgage amount and is most often rolled into the mortgage:

Down Payment %     Old Rate         New Rate       Increase          % Increase    

15%                             1.75%              1.80%              0.05%              2.86%

10%                             2.00%              2.40%              0.40%              20.00%

5%                               2.75%              3.15%              0.40%              14.55%

On a $300,000 Purchase, here would be the changes in the premiums:


Down Payment %     DP Amount    Old Fee           New Fee         Difference

15%                             $45,000           $4,462.50        $4,590.00        $127.50

10%                             $30,000           $5,400.00        $6,480.00        $1,080.00

5%                               $15,000           $7,837.50        $8,977.50        $1,140.00


On a $300,000 Purchase, at 3.50% interest on a 25 year mortgage, this would be the impact on the approximate monthly payments:


Down Payment %     Old PMT        New PMT      Extra/mth

15%                             $1,298.93        $1,299.57        $0.64

10%                             $1,378.72        $1,384.12        $5.41

5%                               $1,466.01        $1,471.72        $5.71

While no one wants to pay more, these numbers show that there is no need to hasten a purchase or jump into a situation due to the fear of increasing costs.  As with anything in Real Estate, doing your proper due diligence and making a purchase when you are on sound financial footing should be a far greater determining factor than the recent changes in the mortgage insurance market.  Please do not hesitate to contact me if you have any questions regarding this or any other aspect of real estate and be sure that you have a good mortgage broker or specialist who is willing to take the time to explain, in detail, all of your mortgage options.

To see a PDF of some additional examples, click here.  For additional tips, links, and downloads, please visit and scroll down to the Document Downloads section.



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Joe Gaglione and Matthew Gaglione, RE/MAX Real Estate Central
#100, 10510 - 121st Street, Edmonton, Alberta, T5N 1L4
Tel: (780) 488-4000 Fax: (780) 426-5700
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