CMHC Eliminates Application Fees and Announces 30-Year Mortgages
Effective immediately, CMHC will eliminate application fees on all high-ratio homeowner mortgage loan insurance products. The typical fee eliminated will be $165, but could be as high as $235 depending on the type of insurance transaction.
A new innovative mortgage insurance product is now available that allows lenders to offer borrowers with a proven history of managing their credit responsibly the option of making interest-only mortgage payments for up to the first 10 years when they purchase or refinance their home. This new option will give borrowers greater flexibility in managing their cash flow.
Earlier this year, CMHC was the first Canadian mortgage insurer to introduce, on a pilot basis, insurance on loans with extended amortization periods of up to 30 years. Building on the success of this pilot, CMHC is now moving to further facilitate homeownership by making this feature on-going, and is also introducing extended amortization periods of up to 35 years.
Elimination of Homeowner High Ratio Application Fees
CMHC is again reducing the costs of homeownership, this time by eliminating application fees on all high ratio homeowner mortgage loan insurance products. This results in the reduction in financing costs of typically $165, but up to $235 depending on the type of insurance transaction. Combined with the premium reductions over the last three years, which reduced premium costs by up to 30%, the elimination of homeowner high ratio application fees demonstrates continuing commitment to keep cost of homeownership affordable for Canadians.
Interest Only Homeownership Product
CMHC’s interest only homeowner mortgage insurance product is designed to allow lenders to provide borrowers who have a strong history of responsibly managing their credit, with flexibility in repaying their mortgage loan. Similar to CMHC’s existing Line of Credit product that has been in the marketplace since 2003, qualified borrowers will be able to pay interest only for the first 10 years of their mortgage. Following the interest only period, principal and interest payments will begin and will be sufficient to ensure the balance is paid in full within 25 years of the date the mortgage was originally initiated.
This feature provides borrowers with cash flow flexibility during the early years of a mortgage in a prudent and responsible manner. Interest only mortgages will be available only for borrowers with a strong track record in managing their debt and who can afford to repay the mortgage principal following the initial interest only period. CMHC will qualify borrowers based on the full principal and interest payment required to repay the loan in full over 25 years.
Extended Homeowner Amortization Periods
Anticipating the needs of Canadians, earlier this year CMHC introduced to the marketplace extended amortization periods of up to 30 years for purchase transactions through a pilot product. The pilot was a great success and has helped improve access for a significant number of Canadians by lowering monthly payments. Accordingly, CMHC is pleased to announce that its 30 year flexible amortization offer is now an ongoing product offering.
Building on the success of the pilot, CMHC is also pleased to introduce extended amortization periods of up to 35 years. Extended amortization flexibilities are available on homeowner purchase and refinance transactions (excluding Line of Credit) and can be combined with their Flex Down product.
Helping Newcomers to Canada Feel at Home
Newcomers to Canada with permanent resident status continue to have access, through their Approved Lender, to all CMHC Homeowner Mortgage Loan Insurance products without any additional borrower eligibility requirements irrespective of the length of time the borrower has been in Canada.
Where there is limited Canadian credit history and where foreign credit bureaus are not availableCMHC has and will continue to consider alternative payment histories, regardless of the loan-to-value ratio. For instance, CMHC assesses the borrower’s willingness and ability to repay through a variety of sources of information including rent payments, and other regular and periodic payment obligations and/or savings.
Cathie Dalziel
Professional Mortgage Advisor
Mortgage Alliance / Mortgage Maxx Inc.
http://mortgagealliance.ca/CathieDalziel
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Contact the Jeffrey Team for more information - 416-388-1960