On May 1, 2014, CMHC made the announcement that premiums for default insurance would go up by an average of 15 per cent. While existing mortgages will not be affected, new home buyers that can’t afford a down-payment of at least 20 per cent will now face new implications, and therefore, need to make sure they’re prepared.
This new increase can be financed over the life of your mortgage and CMHC has estimated that for the average home buyer who requires financing, the new rates will only add $5 a month to their bill.
Here are some further financial considerations for you to make in the process:
1) Closing costs: Mandatory closing costs for the home buyer include land transfer tax, legal fees and disbursements, title insurance and PST on mortgage insurance. You may also be required to pay septic tank and water tests and Estoppel certificate fees. Closing costs are expensive and you can expect to spend 1.5 to 4 per cent of the purchase price.
2) Be prepared by budgeting 3-5 per cent of the value of your home for upkeep every year so you’re not caught off guard if you discover a leak or your shingles start falling off.
3) Furniture/Appliances: If you’re buying an unfurnished home that doesn’t come with appliances, be prepared to spend a pretty penny. You will also need to budget for having your locks re-keyed.