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More changes coming soon for CMHC

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Last week, CMHC announced that it will be taking away 2 of their programs effective May 30, 2014. They are the Second Home program and the Self-Employed without traditional income verification programs. Here are the key components of the change:

·         You will now only be allowed to have one CMHC insured mortgage at a time
·         If you are self-employed, you will now need to provide the standard documentation  to support your declared income
 
Some scenarios of people it will affect the most are:
·         If you have a current CMHC insured mortgage and you wish to purchase another home and keep your current property as a rental
·         If parents wish to co-sign for a child however they already have a CMHC insured mortgage on their home
·         If parents wish to purchase a home for their child to live in (rent free), however they already have a CMHC insured mortgage
·         If parents have co-signed for a child and they wish to sell and purchase a new home and both properties require CMHC insurance

So what other options do you have? Default insurance is required on every transaction where the borrower has less than 20% down. Depending on the circumstances, some borrowers still have to purchase the insurance if they have more than 20% down as well. As of right now, Canada Guaranty and Genworth have not made any similar changes or indicated that they plan to do so. They provide the same coverage of default insurance as CMHC and they offer very similar products and cost. That being said, we are limited to the 3 options in Canada so it will be interesting to see how the new changes affect the market.

Here are some Q&A’s from CMHC on their new changes:

Self Employed Changes

Second Home Changes

Please feel free to contact me with any questions at all.

http://www.christinebuemann.com
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Location: 1596 3rd Avenue, Prince George, BC V2L 3G4, Canada

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