How to take advantage of the CMHC portability option?
Annabelle and Jean-François own a condominium. With a third child who will be born in 6 months, the place is running out. They will therefore move to a larger home. Will they be able to take advantage of the portability option of Canada Mortgage and Housing Corporation (CMHC)?
What is the CMHC portability option?
First, remember that an owner must pay mortgage insurance if he provides a down payment of less than 20% of the selling price of the house.
With the transferability option, moving borrowers can transfer CMHC mortgage loan insurance from their current property to another. Depending on the situation, they may even benefit from a reduction or cancellation of the premium when they take out a new mortgage.
Situation 1: Insurance premium to be paid unchanged
When the terms of the mortgage, that is, the percentage of the down payment, the loan amount and the amortization period, do not change, the insurance premium payable remains the same.
Situation 2: Increase the required premium
Borrowers will see their premium increase if the percentage of the down payment decreases, the loan amount increases or the amortization period is extended.
Situation 3: Bonus Credit
When less than two years elapse between the date of signing of the deed of sale of the two properties, the owners may be reimbursed, in whole or in part, the mortgage insurance premium they have already paid.
Period between the signing of the two notarial deeds Discount of premium
(percentage of the mortgage loan insurance premium paid for the 1st property)
Less than 6 months 100%
Less than 12 months 50%
Less than 24 months 25%
It is possible to transfer the mortgage loan insurance on the period elapsed between the signing of the two notarial deeds of sale exceeds two years, but no premium discount will be granted.
Want to know more about mortgage loan insurance and the portability option? Do not hesitate to contact us!
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