Thursday, April 16, 2015
Less Means More
Mortgage insurance hike June 1 for some new buyers
By Jason Brown, Envision Credit Union/Handout photo
Jeff Knutson, manager of Retail Credit at Envision Financial, works with people to overcome some of the hurdles they face when buying a home.
anadian 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.”
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