Mortgage Loan Insurance is also known as high-ratio mortgage insurance or CHMC Insurance.
Buyers have a difficult enough time saving a down payment for the purchase of a home and all the associated costs. Mortgage Loan Insurance is one of those costs that Buyers would love to avoid but are not always able to. The only way to avoid this cost is to put down a down payment of 20% or greater.
As of July 12, 2009, homes over $1 million are not eligible for Mortgage Loan Insurance so if you are buying a home over $1 million you must put down at least 20%. As of May 1, 2014, these rates will increase by 15%.
This insurance is for the protection of the lender — not you — in case you default on your mortgage.
It is important to realize, however, that it not only protects the lender but also helps the seller get the same interest rates as they would have received by putting down 20% of the purchase price.
CMHC Insurance is not a single fee paid at closing but a premium attached to the mortgage which is paid monthly through the life of the mortgage. If you default on your mortgage, the lender is guaranteed to get back at least the amount still owing on the mortgage.
Premiums depend on purchase price and how much you have as a down payment.
Rather than explaining the calculation for the CHMC Insurance to you, I am providing a simple to use Mortgage Calculator that will help you in your Home Buying Process and gives you this calculation. Simply enter your Purchase Price, Interest Rate, Taxes, Condo Fess (if any) and Amortization (number of years you wish to pay off your mortgage), Hit Calculate and all the calculations including the CHMC Mortgage Insurance are done for you.
Need to know what Land Transfer Tax amount to expect? Your Realtor or your lawyer can tell you how much Land Transfer Tax you will pay. First-Time Buyers receive a rebate. If you want to live in Toronto expect to pay more than Hamilton or Niagara.
A Mortgage Broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost.
My Mortgage Calculator gives you the relevant information and number crunching that you need to consider BEFORE you purchase a home.
Here at the Golfi Team, we are dedicated to making your buying experience as simple and stress-free as possible.