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CMHC Isn't All Bad

Many buyers are so focused on saving a large enough down payment they may forget to do the math. It's not all bad paying CMHC.


CMHC Isn't All Bad Blog Transcription

Hey guys! Rob Reynar here just checking in, interesting conversation with a new buyer client, we were talking about Canada Mortgage and Housing the insurance premium that you pay for not having a conventional mortgage, so anything under twenty percent down. He's done a fantastic job, he saved twenty five or twenty percent down to make a purchase but do you need to be scared of CMHC? and I don't think you really do and here's some quick math for you. Now, get a pen you might wanna write this down. Let's say you're buying a four hundred thousand dollar house and you put twenty percent down so that's eighty thousand, you have no CMHC fees and if you're looking at say, a three percent mortgage, you're looking at about fifteen - fourteen a month. Okay, so that's not bad great mortgage rates you saved your twenty percent down. Let's say you decided to only put fifteen percent down, which is sixty thousand dollars. That makes your mortgage payments including Canada Mortgage and Housing fees of fifty nine fifty for the term and the mortgage, sixteen thirty eight. So, that's a hundred and twenty four dollars more a month for fifteen percent down as opposed to twenty percent down and you're saving the twenty thousand dollars and it really is only seventy four hundred dollars more over the term of the mortgage. So, the bank is saying, "give us twenty thousand to save seventy four forty", I don't think that's a good deal for you. I think you could do a lot more with that twenty percent down, there's tons of options to make good money long term on that twenty thousand dollars. If you take it one step further and you could afford or could be approved to buy a four hundred thousand dollar house with ten percent down. So, forty thousand, it's a difference of about two hundred and twenty three a month, that's over thirteen thirty eight over the course of the mortgage and it's forty thousand dollars. So again the bank is saying, "give us forty to save thirteen three", again I don't think that's a good deal for you. If you can approved on ten or twenty or fifteen, I think that's maybe not a bad option for you. Keep your money, don't give it to the bank to save a little bit of CMHC fees. I know there's a lot of numbers there but if you really listen to that again, think through that it might really work for you if you have any comments on this, I'd love to hear it from you R-E-Y-N-A-R, talk to you soon, buh bye!

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