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Is the CMHC’s mortgage insurance calculator wrong?
– moneysense.ca
Q: MoneySense says that a 20% home down payment waives any mortgage loan insurance premium. However, when I enter a purchase price of $250,000 with a down payment of $50,000 on the CMHC’s website calculator it gives me a mortgage insurance premium of $2,500, not $0. What gives?
—Jonathan Kuzub, Ottawa
A: As you rightly point out, a down payment of at least 20% of the purchase price should eliminate the need for mortgage loan insurance. I tried both the CMHC and Genworth calculators with an even more dramatic example—a down payment that covered 80% of the purchase price—and it still showed that I would have to pay insurance of $300. The CMHC disclaimer states that, “This calculator will return a premium amount regardless of the down payment amount entered.” The reason is that many lenders will still purchase mortgage loan insurance on homes with a down payment of more than 20%—they just don’t pass on the cost to the borrower. I personally think the calculator would be more useful if the algorithm used an “if/then” statement to eliminate this confusion…
—Jonathan Kuzub, Ottawa
A: As you rightly point out, a down payment of at least 20% of the purchase price should eliminate the need for mortgage loan insurance. I tried both the CMHC and Genworth calculators with an even more dramatic example—a down payment that covered 80% of the purchase price—and it still showed that I would have to pay insurance of $300. The CMHC disclaimer states that, “This calculator will return a premium amount regardless of the down payment amount entered.” The reason is that many lenders will still purchase mortgage loan insurance on homes with a down payment of more than 20%—they just don’t pass on the cost to the borrower. I personally think the calculator would be more useful if the algorithm used an “if/then” statement to eliminate this confusion…
Home insurance you didn’t know you had
– moneysense.ca
You purchase home insurance to protect you from catastrophic losses, such as an all-consuming house fire, or a massive back-up of sewage water in your basement. But did you know your everyday home insurance policy can often protect you for perils that are not always so obvious? We talked to Wayne Ross, vice president of claims at Aviva, on the coverage you already have, but don’t know about, along with a few add-ons that may be worth exploring. (Caveat: every insurance provider and policy are different so double-check with your insurance provider.)
What your home insurance already protects against
→ Mortgage rate protector
In the event of a big loss, where you find yourself displaced from your home as you rebuild, this coverage will protect your mortgage rate. For example, when you get your mortgage you negotiate for a five-year fixed rate at 2.65%. But in year two, you have a massive electrical fire that prompts extensive rebuilding that takes the better part of six months. In that time, the five-year fixed rate jumps to 3…
What your home insurance already protects against
→ Mortgage rate protector
In the event of a big loss, where you find yourself displaced from your home as you rebuild, this coverage will protect your mortgage rate. For example, when you get your mortgage you negotiate for a five-year fixed rate at 2.65%. But in year two, you have a massive electrical fire that prompts extensive rebuilding that takes the better part of six months. In that time, the five-year fixed rate jumps to 3…
