Mortgage Update from Michaela Ross

CMHC changes

As of May 1st underwriting insurance premiums were increased. For example, those putting 5% down went from paying 2.75% to 3.15%. This increase of 15% is fairly negligible, but it was the first glimpse of other changes to come. Government regulated CMHC then went on to announce that as of May 30th they will discontinue there self-employed without 3rd party income confirmation and second home/vacation home programs.

The two other underwriting insurers Canada Guarantee and Genworth Canada have announced that they will not be cutting these programs. 

For those self-employed people using a stated income, there are still products available that require a minimum of business for self of 2 years and as little as 10% down for approved buyers.  There are even some lenders that do not add extra premiums onto their rates for BFS clients.  

Here is an example of how the second home product could adversely affect you, the consumer. If you purchased a condo with CMHC insurance (say you put 5% or 10% down) and you suddenly have a growing family and you need a larger space a couple of years later. Your plan is to rent out the condo and buy a house and you want to put use less than 20% down. CMHC will not insure more than one property at once.  Unless the condo has appreciated enough to refinance without underwriting insurance, Canada Guarantee and Genworth Canada will be the only options available. 

It has yet to be seen if CMHC has any immediate plans for any further tightening of there rules. Some even speculate that this sudden action may allegedly be CMHC planning to move towards privatization. 

Now more than ever, it proves best to have an educated and informed broker working on your side to navigate you into products that will best suit your needs.