November Mortgage Update - The New Insured Refinancing Program
Every month it seems we have a new mortgage program designed to help with affordability - it's almost like there is an election coming? Hmmm...
Here's all the details of the the new refinancing program that' was announced last month.
What is it?
Clients can refinance up to 90% of the "as improved" value of a home to add a secondary suite.
Can you give me an example?
Client purchases a home for $800,000.
If they turned the home into a duplex, it would be appraised at $1,000,000 (this is the "as improved" value).
Under this program, the clients would be able to refinance all the way up to $900,000 to do the work.
What are the details?
Begins Jan 15, 2025.
30 year amortization allowed.
Clients can do up to 4 units. They all need to be self contained and meet municipal zoning requirements (private entrance, kitchen, bathroom, etc...).
Can't use for an Airbnb.
What don't we know?
How much is the insurance premium (CMHC fee)? This could be around 5% (give or take). So that $900,000 in the example above could come with a $45,000 price tag tacked on to the mortgage.
What are the fine details? How is this regulated? What's the process?
Summary
I think it's a nice tool in the belt, but I do think its use is going to be very limited simply because insured mortgages are harder to qualify for. CMHC mortgages have a very stringent stress test.
The investors who wouldn't balk at the CMHC fee because they are used to private money, simply won't qualify for this program due to not being able to debt service the loan under the stress test.
Overall, I love that there's another tool available to help clients, but I don't think I'll end up doing many of these in 2025.
Credits and thank you to Jim Steffler for this information. If you’re looking for a great mortgage agent, consider reaching out to Jim!
Jim Steffler
Mortgage Agent Level 2
Dominion Lending Centres National Ltd.
TEL: 226-338-5136
EMAIL: jim@jimstefflermortgages.com
https://jimstefflermortgages.com