Qualifying Rate:
- Regardless of the mortgage term you choose, the interest rate used to qualify you will be "the greater of the contract rate and the Approved Lender's five-year fixed rate."
- There is big confusion about which 5-year fixed rate will be used: discounted or posted. A source at CMHC tells us this is the #1 question they've been getting.
- It's a key point because posted 5-year rates are as much as 1.6% higher than 5-year discounted rates. If posted rates are used, it means borrowers will qualify for lower mortgage amounts.
- The Finance Department is apparently aware of this ambiguity and is expected to announce clarification on this point in the next few days.
- It's interesting to note that CMHC used to require that lenders use the 5-year posted rate to qualify people on variable-rate mortgages. Perhaps they'll go back to this? We'll see.
Second Homes:
- CMHC will no longer insure 2nd homes with more than one unit.
- The borrower or his/her relative must live in the property "at some point during the year" and on a "rent-free" basis. Lenders must confirm that this will be the borrower's intention.
Borrowed Down Payments:
- We hear that borrowers might no longer be able to borrow their down payments on an insured rental mortgage. We're awaiting confirmation of this.
Porting Existing 95% Rental Mortgages:
- If you switch an existing rental mortgage to a new lender, and the loan-to-value is over 80%, you will not be affected by the new 80% maximum LTV requirement. (As long as the loan amount, LTV, and amortization do not change.)
5+ Unit Rental Properties:
- 5+ unit rental mortgages will not be affected by these changes when insured under CMHC's Multi-Unit program.
Please feel free to give me a call if you have any questions.
Your Mortgage Specialist,
Shirin Mazidi
1-866-762-3811
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