Mortgage insurance hike a good pause for thought for homebuyers
Submitted. Canadian homebuyers will be paying just a little bit more to become homeowners in 2015. Come June, two of Canada’s three major high-ratio mortgage insurers, CMHC and Genworth, will increase their insurance premiums for buyers with a down payment of less than 10 per cent.
“With the average home price in Vancouver and the Lower Mainland, the extra premium is a substantial chunk of money when you look at total amount, rather than as a monthly payment,” says Jeff Knutson, manager of Retail Credit at Envision Financial, a division of First West Credit Union. “That money could easily pay for a much-needed vacation or be funneled into those all-important retirement savings.”
In an example scenario provided by CMHC, a homebuyer purchasing a $450,000 home with a down payment of less than 10 per cent, at a rate of 2.79 per cent and a 25-year amortization, can expect to pay an additional $2,025 in insurance premiums.
“It’s becoming almost impossible for homeowners to leverage the equity in their home if it’s less than 20 per cent and this adds another hurdle,” Knutson says. “We encourage homebuyers to be honest with themselves, to take the emotion out of the home buying experience to make sure they’re not putting added pressure on their household budget when pursuing home ownership.”
About Envision Financial
Envision Financial is a premier provider of banking, investment and insurance services for residents and businesses throughout the Fraser Valley, Lower Mainland and Kitimat regions. As a division of First West Credit Union, B.C.’s third-largest credit union with 54 branches and 42 insurance offices throughout the province, Envision Financial brings innovative products, an extensive branch network and local decision making to the banking experience. For more information on Envision Financial, visit www.envisionfinancial.ca.