Vancouver Real Estate and Mortgage Financing

What is CMHC Mortgage Insurance? Jonathan Fung Mortgage Specialist Explains!

CMHC Mortgage Insurance Explained by Jonathan Fung Vancity Mortgage Specialist!

What is CMHC Mortgage Insurance?

To answer this question, I recently met with Jonathan Fung, a mortgage specialist with Vancity who was kind enough to discuss CMHC mortgage insurance with us.

What is CMHC Mortgage Insurance?

CMHC stands for Canada Mortgage and Housing Corporation, which is a Crown Corporation owned by the Federal Government. One of CMHC’s core functions via its Mortgage Insurance is to assist illegible buyers purchase a home in Canada with less than a 20% down payment.

Lenders and Financial Institutions view property purchases with less than a 20% down payment as higher risk of default (ie Borrowers not paying their mortgage). Without CMHC mortgage insurance, lenders typically will not lend to borrowers with less than a 20% down payment.

CMHC insurance is available and required anytime a purchaser wants to buy home in Canada with between a 5% and 20% down payment. CMHC Mortgage Insurance does not insure property purchaser, but rather the financial institution where the purchaser is borrowing the money. CMHC Mortgage Insurance insure the lender so that if the borrower doesn’t pay their mortgage, the lender gets their money back.

Whats the Catch with CMHC Mortgage Insurance?  Continue Reading…

July 2012 Canadian Mortgage Rules! 25 Year Amortizations for Insured Mortgages Only & CMHC Insurance for Homes over a Million Gone!

New Canadian Mortgage Rules Come Into Effect July 9 2012

Federal Finance Minister Jim Flaherty recently announced major changes to Canada mortgage lending rules.

This move continues the theme of the 2011 mortgage rule changes were the Federal Government does a focused cooling of the housing market without resorting to raising interest rates which would have a negative impact on the overall economy.

What are the Changes in Canada’s Mortgage Rules?

The four major changes effective July 9, 2012 are as follows:  Continue Reading…

An Answer to Florin’s Question: Can a Presale Bought High Ratio be Completed on Low Ratio?

Financial Leverage and Presale Condos in Vancouver

I LOVE Questions and Comments on my blog posts and appreciate them HUGELY!!

We recently had a great question (Thanks Again Florin!) in the comments section of Episode 2 of How to Buy a Presale Condo where we discussed the advantages of pre-construction condos for Owner/Occupiers.

This question was SOOOO GOOD, I decided to bring in a mortgage broker, Chad Watts and shoot an entire video on this topic!

Florins Question:

I asked my mortgage specialist about point 3 “Financial Leverage.” The one where you mentioned “buyer who previously was a high ratio borrower to become a low ratio borrower” if the property value goes up. She told me that this in not the case anymore. The bank will only base the financing on the purchase price of the home. Is this correct and if so is this true to all banks?

The mortgage specialist Florin spoke to is right.

There are rules restricting lenders from giving a mortgage on the actual market value of a presale condo if it has gone up in value from when it was purchased pre-construction to when it completes.

BUT, this does not mean the buyer of a presale condo in Vancouver cannot leverage the increase in value of the property between the time of purchase and the completion date.

Can a Presale Bought High Ratio be Completed on Low Ratio? Yes, in a Roundabout Way!

This only works when the presale  Continue Reading…

2.99% for a 5 Year Fixed Mortgage? The Catch Explained!

Lowest 5 year Fixed Rate Mortgages in Canada Ever!

The Finance Minister and the heads of the Big Canadian Banks have recently been alluding to the fact that the property market in Canada, particularly in the real estate markets in Vancouver and Toronto may be getting a bit too hot for their liking based on the very low interest rates we are seeing in Canada right now.

And then came this…

2.99% on a 5 Year Fixed Mortgage? Whats the Catch?

This is the lowest 5 Year Fixed Rate Mortgages have EVER been!

I recently interviewed   Continue Reading…