3 June 2014
In case the borrower doesn’t pay off the loan, the lender has the right to take its security (the house) for compensating the rest of the loan. And if the sale of the property doesn’t cover the debt, the borrower may have to pay the rest. Nowadays, mortgage is the primary source of financing the real estate purchase.
2. What can be used as a source for mortgage down payment?
With CMHC mortgage insurance you can buy a house with a minimum down payment of 5%.
Traditional mortgage loan insurances require buyers to come up with the minimum down payment from their own resources. Nevertheless, they may also accept gift down payments from your relatives.
Homebuyers with a good credit history can provide the 5% down payment from numerous sources, e.g. borrowed funds. The main thing is they shouldn’t be tied to the purchase or sale of the real estate. In order to get more information, please, contact your mortgage broker.
3. When can a bank require mortgage loan insurance?
Usually lenders require mortgage loan insurance if a borrower can’t provide a 20% down payment.
CMHC protects lenders from mortgage defaults, thus helping consumers to make their homeownership dream come true.
4. Is there a maximum house price for CMHC Mortgage Insurance?
Yes. If your loan-to-value ratio exceeds 80%, the maximum purchase price should be less than $1,000,000.
5. Who should arrange CMHC Mortgage Insurance?
Your lender will do all the mortgage insurance arrangements. Once you negotiate your mortgage terms, ask for CMHC insurance.
6. Does CMHC Mortgage Loan Insurance apply only to traditional single-family houses?
No. CMHC offers mortgage insurance on different housing types: condos, duplexes, manufactured or mobile homes, properties with renovations needed, rental and nursing homes.
7. Who should pay for the CMHC Mortgage Loan Insurance?
Generally, the cost is passed to the borrower. You may pay at once or include the premium into your mortgage loan payments.
CMHC professionally manages its mortgage insurance business, ensuring commercial stability even in more severe economic times. Today CMHC has sufficient reserves consistent with the requirements, set by the office of the Superintendent of Financial Institutions.
8. They say I may refinance my home for making some renovations. How does it work?
If the bank refinances your loan using CMHC Mortgage Loan Insurance, you have a chance to increase the existing mortgage up to 80% of its current value. Of course, there are certain requirements for this, so, please, consult a professional.
9. I have a CMHC-insured mortgage and I am moving to another house. What CMHC products could you recommend?
If your lender got CMHC Mortgage Loan Insurance on your house on or after April 1, 1996, and now you are buying a new home, there may be a mortgage portability variant. Portability allows you to save money by decreasing or even eliminating the premium on a new house purchase. Please, consult your bank or a mortgage broker for more information concerning this issue.