CMHC cutting back Insurance Coverage
April 28, 2014 | Posted by: Laking Financial
Effective May 30, CMHC said it will discontinue insuring second homes and will require self-employed Canadians to have third party income income validation.
Now will you be able to buy a second home? The simple answer is Yes but it may not be able to be insured meaning you may require a larger down payment. There are Private mortgage insurers in Canada who have similar programs that may not cut their programs. Time will tell after they have a chance to respond.
The second home product was introduced in 2005 and applied when purchasing an owner-occupied second home anywhere in Canada.
CMHC said it will limit the availability of homeowner mortgage loan insurance to only one property (one to four units) per borrower/co-borrower at any given time.
For self-employed borrowers this will make things more difficult to obtain mortgage financing. Many self-employed borrowers often have many expenses to write off thus lowering their taxable income. While this does help save on taxes, it has a negative impact on mortgage financing. There is currently another self-employed program available with Genworth Financial (private mortgage insurer). For those self-employed borrowers, lets hope they don't make any changes.
If you have any additional questions regarding these changes or any other financing questions you can email us at firstname.lastname@example.org, call us at 506-474-1070 or visit our Facebook page www.facebook.com/lakingfinancial.