25 April 2014

25 AFor most self-employed borrowers the income validation is quite easy: they need to provide copies of their Notice of Assessment, audited financial statements or unaudited financial statements (prepared by a third party) for 2 previous years.

In addition to it, CMHC is planning to limit the availability of mortgage loan insurance to one property per borrower or co-borrower at any time.

Here are some of the typical questions one may ask in this situation and the following answers to them.

When will CMHC eliminate its Second Home and Self-Employed Without 3rd Party Income Validation products?

Second Home and Self-Employed Without 3rd Party Income Validation will be still available for new mortgage insurance applications submitted to the Corp. before May 30, 2014, regardless of the home purchase closing date. As usual, a lender will have to provide CMHC with the complete borrower and property details when applying for mortgage loan insurance.

I’m going to purchase a house in the next few months and I’ll need CMHC insurance.  Will I be able to use CMHC’s Second Home or Self-Employed Without 3rd Party Income Validation products, if I don’t know which property I’ll buy before May 30, 2014?

Your financial institution will have to provide CMHC with a full mortgage insurance application prior to May 30, 2014. Once your bank receives from you all the necessary information about borrower and property, they will proceed with a mortgage loan insurance application.

Second Home and Self-Employed Without 3rd Party Income Validation will be still available for new mortgage insurance applications submitted to the Corp. before May 30, 2014.

Does it mean a borrower will not be able to be a co-borrower in another loan insurance application?

CMHC is planning to limit the availability of mortgage loan insurance to one property per borrower or co-borrower at any time.

Will CMHC accept bridge financing when the closing date of a home purchase is before the closing date of a home sale?

Such bridge financing will be allowed if there’s a firm purchase and sale agreement for the existing real estate. Any other exceptions, which may be caused by unexpected circumstances, will be viewed individually.

 

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