As you have heard, Canada Mortgage and Housing has announced some rule changes once again. Now that the dust has settled on this announcement, in reality this will have little or no significant impact as a prospective buyer as Canada’s other two insurers are not following CMHC’s changes.
There are three Mortgage Insurers in Canada.
Ø CMHC ( government insurer)
Ø Genworth (non government)
Ø Canada Guaranty (non government)
Here are the 3 changes announced by CMHC effective April 30, 2014.
1. CMHC insurance premiums increased by 15%. This sounds significant, but in reality based on a $250,000 mortgage this increases a payment by $4.73 per month based on the current 5 year fixed rate of 2.94%.
- Genworth and Canada Guaranty are not making any change to their insurance pricing.
2. CMHC discontinues the second home mortgage product. Previously you could purchase a second home (maximum 2 units) for 5% down for a family member. For example, this was ideal for parents with children away at university. Parents could invest in a second property and have the kids live there rather than throwing money away on rent.
- Genworth is making no change to their current program and still allowing two (2) units and Canada Guaranty in modifying their program and limiting it to one (1) unit.
3. CMHC discontinues Self employed program. CMHC has discontinued the Self Employed Stated Income Program and now require full verification of income.
- Once again Genworth and Canada Guaranty are maintaining their current Self Employed program. This program allows self employed purchasers who are challenged to providing traditional income verification (pay statement, T4, NOA’s) to provide alternative documentation to demonstrate their income.
In reality there is really no significant change in the way that we do business going forward.
Bill Cossitt is a highy qualified and reliable mortgage professional who works for his clients and not any one bank. Give him a call, he is always available to answer questions or offer clarification on any changes to mortgage insurance or rules.
Bill Cossitt, AMP
CENTUM Mortgage Team Inc.