Genesis Associates Mortgage Brokers on Mortgage Insurance (866) 410.4410

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Genesis Associates Mortgage Brokers on Mortgage Insurance

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"Please contact us for a “no charge consultation" so that we can better assist and understand your individual situation the information you need regarding Ontario mortgage insurance questions. CMHC or Genworth Mortgage Insurance (Ontario)

What is Mortgage Insurance in Ontario (CMHC or Genworth)?

To begin, separate from mortgage life insurance or home, property, fire and casualty insurance, mortgage insurance provides protection to the institution as a lender in the event of a default.

If the amount of the mortgage exceeds 75% of the lending value of the mortgaged property, the mortgage is considered a "high ratio" loan and therefore subject to "be a perceived risk". Accordingly, and as required by law, mortgage insurance must be purchased for the full amount of the mortgage (not the full amount of the purchase price). Mortgage insurance is available from CMHC and GEMICO and it is generally the institutional lender who will choose between the 2 and make the application. The premium is subject to PST 8% tax which is required for payment at time of closing.

An application fee and an insurance premium (which can be added to the mortgage amount) are due to the insurer.

In some cases an institution may require a mortgage to be insured even if the loan-to-value ratio is less than 75%. For example, the bank may require insurance as a condition of the loan if the property is considered higher risk (e.g. the home is in a highly volatile real estate market, or may be difficult to resell).

CMHC's housing finance activities centre around giving Canadians access to affordable financing choices. The main tool for achieving this goal is our Mortgage Loan Insurance program which has helped many Canadians realize their dream of owning a home. CMHC's Mortgage Loan Insurance insures Approved Lenders against borrower default, in turn allowing Canadians to access high-ratio mortgages at the lowest possible rates anywhere in Canada.

Your direct link to CMHC: www.cmhc.ca

CMHC Enhances Flexibility in Mortgage Amortization and Eliminates Application Fees: OTTAWA: June 28, 2006

Effective July 14, 2003

Loan Amount as                                                                 Premium on Increase
a % of the Value                      Purchase Premium           to Loan Amount for
of the Home (LTV)                   on Total Loan                   Portability and Refinance *

Up to and including 65% 0.50% 0.50%

Up to and including 75% 0.65% 2.25%

Up to and including 80% 1.00% 2.75%

Up to and including 85% 1.75% 3.50%

Up to and including 90% 2.00% 4.25%

Up to and including 95% 2.75% (lowered from 3.25% April 22, 2005)

Up to and including 95% 2.90% ("FLEX DOWN"** lowered from 3.40% April 22, 2005)

**Flex Down: Eligible borrowers can access the minimum 5% down payment from a variety of sources, including borrowed funds or lender incentives, provided the funds are at arm's length from (and not tied to) the purchase or sale of the property.

Premium Surcharges apply on the following:

Progress Advance: 0.50%

Standard Variable Rate Mortgages (VRM's): 0.25%

30 Year Amortization: 0.20%

35 Year Amortization: 0.40%

Extended amortizations are not available for CMHC Line of Credit (LOC), Flex Down, or Refinance products.

Blended Amortization for Refinance and Portability: 0.50%*

Secured Line of Credit:
Non-Amortizing Repayment Option: 5 years (5/20) 0.25% 10 years (10/15) 0.50%

* For Portability and Refinance, the premium is the lesser of the premium on the increase to the loan amount or, the Purchase premium on the total loan. In the case of Portability, a premium credit may be available under certain conditions to reduce the Purchase premium.

For most people, the hardest part of buying a home - especially a first home - is saving the necessary down payment. If a buyer has less than 25% of the purchase price to put down, a lender will require mortgage insurance as protection against any payment default. Homebuyers with CMHC Mortgage Loan Insurance can purchase a property with as little as 5% down. Since CMHC introduced the Mortgage Loan Insurance in 1954, they have helped one in three Canadians obtain financing for their homes. Mortgage insurance also helps landlords and developers access low-cost financing which helps ensure a supply of affordable rental units.

NHA Mortgage-Backed Securities have been available to the financial marketplace since 1987, and have become an integral part of the financial system - as an attractive, real estate-based investment offering both high yields and maximum security, and as a source of financing for the Canadian housing industry.

Did you know…
… that in January 2005 CMHC improved access to the full spectrum of the homeowner mortgage insurance products for self-employed Canadians?

To determine income for a self-employed borrower, a simple gross up of the Total Income (Line 150) on their Canada Revenue Agency (CRA) Notice of Assessment (NOA) by 15% can be used.

Borrowers who have eligible deductions in excess of 15% of the income on their NOA may opt to provide audited or accountant prepared financial statements to support a higher income level, in lieu of the standard 15% gross up.

Self-employed applicants are normally required to demonstrate at least two full years of operation of their business.

If a borrower has been working for an extended period of time and recently became self-employed in the same field, the two-year self-employment requirement does not apply.

Minimum time of business operation can be documented through income tax returns supported by the borrower’s NOA, business credit reports, GST returns, active business bank accounts, audited or accountant prepared financial statements.

Want to learn more?
Visit CMHC website at www.cmhc.ca