Changes are on the Horizon again with CMHC
As many of you may know on May 1, 2014 all Default Insurance Premiums will be increasing. This was initiated by CMHC but both Genworth and Canada Guaranty will stay in-line with the CMHC guidelines.
As of May 30, 2014 there will be additional changes that come into play.
1. CMHC will be dropping their Business for Self, less than 2 years, stated income program.
2. CMHC will be discontinuing their Second Home Product
3. CMHC will limit the availability of homeowner mortgage loan insurance to only one property per borrower/co-borrower at any given time
At the moment, Genworth and Canada Guaranty have not opted to follow the lead of CMHC.
How this affects you the Consumer:
1. Business-For-Self – If you have been self-employed for less than 2 years, the mortgage amount that you qualify for will be based on a 2 year average of your line 150 income on your Notice of Assessments. On a positive note, using this qualified income you are able to utilize a down payment amount of 5% but, it will limit the amount of mortgage you will be able to qualify for. Other options include a 10% down payment with an alternative lender that uses a self-insured program. On a case per case basis, even with the higher rate for the one year, I have been finding that it is actually can be cheaper route to go.
2. Second Homes – Borrowers will be required to put down a minimum of 20% towards the purchase of a cottage, home for their children or elderly parents, or other type of second home. Again, at the moment, this only applies to CMHC and the other insurers have not currently changed their position on this. As well, depending on the area, a second mortgage of up to 15% could facilitate this type of transaction.
3. Single Property Insurance – This could affect anyone who would like to rent out their current home to purchase a new home and someone who may be co-signing or acting as a guarantor. Again, at the moment,this is only a CMHC initiative. There are other solutions for individuals finding this a challange and going forward we would be happy to demonstrate on a case per case basis.
For more information visit the CMHC Link direclty
and definitely feel free to contact my team at:
416 788 6207 or TBrock@DominionLending.ca