With an average home price hovering around $300,000 in SK, the current insurance premium with 5% down is 2.75% or $7,837.50. Once the changes take effect this will become 3.15% or $8,977.50. A difference of $1140, or roughly $5 per month on a standard 25 year mortgage payment.
The two other private insurers (Genworth and Canada Guaranty) have also followed suit and will be charging the same premiums as of May 1st. A full list of all changes can be found here: http://www.cmhc.ca/en/hoficlincl/moloin/moloin_013.cfm
So what can we as home buyers do to combat this fee? I have two tips to help you ease the pain of these recent changes:
Make sure your financing has been submitted for approval prior to May 1st. As long as you make an offer and your bank/lender submits the file prior to May 1st, you can move in months later and the new premiums will not apply. I know this is a little unrealistic being that we are only days away from these recent changes but it is the most immediate solution.
Offset the expense with a better mortgage rate (you knew this was coming). Again, based on $300,000, a .10% difference in your mortgage rate, you will save roughly $1400 over the course of a standard 5 year term.
All in all, if you qualify to buy a home today, the changes should not impact your ability to purchase the same home after May 1st. Debt ratios will remain almost identical with the $5 per month increase to a mortgage payment so although these are higher costs, don’t expect them to change anything in the housing market.
Please free to send me an email, text, or call anytime. I am always happy to help home buyers with any questions they may have, strategize over future plans or save you money on your mortgage!
TMG The Mortgage Group