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Critics charge CMHC once again has moved into risky territory, the last time being its decision to allow Canadians no money down on a principle residence. “Look at the fee, anytime it’s that high, you know there is a lot of risk,” said one senior mortgage industry observer.
 

The mortgage insurance fee for the new product is 7.25% of the total amount of the loan.  So a $300,000 mortgage would have a $21,750 mortgage insurance fee.
 

Instead of paying the fee up front, CMHC will allow that fee to be added to the overall mortgage which can be amortized over as many as 40 years. Based on 5.8% interest,  the current discounted rate for a five-year term, it would cost just over $1,700 a month to carry that $321,750 mortgage.

This entry was posted on Thursday, October 25th, 2007 at 10:19 am and is filed under Credit, Debt, Financial, Loans, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.