So, by now you’ve all heard that CMHC has changed things up a bit, mainly by removing 35 year amortizations. But what do the recent changes actually mean to you?
Using a purchase price of $350,000 let’s compare the monthly mortgage payment on 30 versus 35 year amortizations using today’s five year rate of 3.89% and assuming a minimum 5% down payment.
Purchase price: $350,000
Less 5% down payment: -$17,500
Amount ot be mortgaged: $332,500
Scenario 1: 35 year amortization
CMHC premium: $10,473.75
Total mortgage: $342,973.75
Monthly mortgage payment: $1,489.70
Scenario 2: 30 year amortization
CMHC premium: $9,808.75
Total mortgage: $342,308.75
Monthly Mortgage payment: $1,606.50
That works out to an extra $116.50 a month. Keep in mind, you will be saving significant interest costs over the life of your mortgage by choosing a shorter amortization.
If you have any questions regarding the recent changes to CMHC insured mortgages feel free to drop me a line anytime!