http://www.mikestewart.ca/what-is-cmhc-mortgage-insurance-jonathan-fung-mortgage-specialist-explains
We are talking to Jonathan Fung with Vancity. Jonathan is a mortgage specialist with Vancity. The reason asked Jonathan down here is about to ask about CMHC mortgage insurance and putting less than 20% down when you’re buying a property.
CMHC stands for Canada Mortgage and Housing Corporation. They are a government crown corporation. What they do is anytime someone is looking to purchase a new home with less than 20% down, anywhere between 5% and 20%, CMHC will jump in there and help out with the mortgage and deal with the financial institution. There is an insurance premium that gets charged depending on the size of the mortgage. But they essentially allow for people who have less 20% to get into the housing market and be homeowners.
The CMHC mortgage insurance is for the benefit of the lender, so that if the borrower doesn’t pay the mortgage, CMHC will pay the lender back. Most financial institutions are usually looking for at least 20% for the down payment, so anything less is viewed as a higher risk for the lender. So CMHC, for mortgages that have less than 20% (5-20%), they will jump in and put an insurance premium on the mortgage which essentially offers more security to the financial institution and they will be more comfortable with the deal.
For example, if you are buying a property with a mortgage of over $500,000 and you put 5% down. Is there a chance for the CMHC mortgage insurance premium to be more than the 5%? As the mortgage amount increases and as the down payment is less, the insurance premium could potentially add up to be quite a bit. In the worst-case scenario, the premium could be over the amount of the down payment. So best advice is to get as close to the 20% down payment mark as possible. Having 20% or more is always the best option because you avoid the CMHC insurance premium requirement, but CMHC is there to offer more options and help people be homeowners if they don’t have 20% down.
If you have any more questions for Jonathan, about CMHC mortgages or any mortgage questions in general, he can be reached at (604) 356-1589. Thanks for watching Mike Stewart, if you have any questions about real estate in Vancouver, you can reach me at (604) 763-3136 or by email at mike@mikestewart.ca
!
We are talking to Jonathan Fung with Vancity. Jonathan is a mortgage specialist with Vancity. The reason asked Jonathan down here is about to ask about CMHC mortgage insurance and putting less than 20% down when you’re buying a property.
CMHC stands for Canada Mortgage and Housing Corporation. They are a government crown corporation. What they do is anytime someone is looking to purchase a new home with less than 20% down, anywhere between 5% and 20%, CMHC will jump in there and help out with the mortgage and deal with the financial institution. There is an insurance premium that gets charged depending on the size of the mortgage. But they essentially allow for people who have less 20% to get into the housing market and be homeowners.
The CMHC mortgage insurance is for the benefit of the lender, so that if the borrower doesn’t pay the mortgage, CMHC will pay the lender back. Most financial institutions are usually looking for at least 20% for the down payment, so anything less is viewed as a higher risk for the lender. So CMHC, for mortgages that have less than 20% (5-20%), they will jump in and put an insurance premium on the mortgage which essentially offers more security to the financial institution and they will be more comfortable with the deal.
For example, if you are buying a property with a mortgage of over $500,000 and you put 5% down. Is there a chance for the CMHC mortgage insurance premium to be more than the 5%? As the mortgage amount increases and as the down payment is less, the insurance premium could potentially add up to be quite a bit. In the worst-case scenario, the premium could be over the amount of the down payment. So best advice is to get as close to the 20% down payment mark as possible. Having 20% or more is always the best option because you avoid the CMHC insurance premium requirement, but CMHC is there to offer more options and help people be homeowners if they don’t have 20% down.
If you have any more questions for Jonathan, about CMHC mortgages or any mortgage questions in general, he can be reached at (604) 356-1589. Thanks for watching Mike Stewart, if you have any questions about real estate in Vancouver, you can reach me at (604) 763-3136 or by email at mike@mikestewart.ca
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