CMHC Mortgage Loans
      Example #1: Interest savings through mortgage loan insurance

Spend less money — and buy your home sooner! With CMHC mortgage loan insurance, your lower down payment helps you to buy your own home sooner — and access the most competitive interest rates in the market.

Mortgage amount: $100,000 Term: 3 year — closed Down payment: 10%

Scenario A: Scenario B:
  • Paul finances his mortgage using CMHC mortgage loan insurance.
  • This gives him access to a 5.6% interest rate*.
  • added to the mortgage amount.
  • Based on this interest rate, Paul’s monthly payment is $616.23.
    		•
  • Paul’s brother Marc finances his mortgage without mortgage loan insurance, through a lender that can offer home financing without requiring a down payment greater than 20%. Because the lender is not insured against borrower default, it is likely that Marc will pay a higher rate of interest than Paul in scenario A — approximately 6.6%*. T
  • he lender typically also charges a one-time administration fee of 3% of the loan amount to compensate for the additional risk. In this case, Marc paid a $3,000 administrative fee.
  • Based on this interest rate, Marc’s monthly payment is $675.90.
    		•
    *Based on actual April 2005 interest rates posted by a large National Lender using mortgage loan insurance and a smaller Lender who offers mortgage financing without requiring mortgage loan insurance.

    Conclusion:
    After these first three-years:
  • Under Scenario B, Marc would pay an additional $2,915.46 in interest, as well as the extra $1,000 up front.
  • Under Scenario A, Paul’s savings from the lower interest rate alone more than offset the cost of the mortgage loan insurance premium.

    Disclaimer
    The examples on this site are provided for illustrative and estimative purposes only. The data and information on this site is considered reliable at the time presented, however in the housing market, rates, terms and conditions may change daily. Despite our best efforts, CMHC cannot guarantee that the information is accurate or complete or that it is up to date at all times. Although considerable care has been taken in preparing and maintaining the information and materials, they are provided on an "as is" basis without warranty of any kind, express or implied. CMHC assumes no responsibility or liability of any kind and CMHC shall not be liable for any special, indirect or consequential damages in connection to the information provided. This site is not intended to provide financial or other advice and should not be relied upon in that regard. Neither CMHC nor any of its employees, agents, or advisors shall have any liability for the accuracy of the illustrations herein or for any damage caused by or related to the use of any of this information.


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