Taking advantage of the CMHC portability option

Monday August 6th, 2018

Taking advantage of the CMHC portability option

Anna and Jeff own a condo. However, with their third child on the way, they need to buy a larger home. Can they take advantage of the Canada Mortgage and Housing Corporation (CMHC) portability option?

What is the CMHC portability option?

All buyers who provide a down payment of less than 20% of the purchase price are required to take out mortgage insurance.

With the portability option, borrowers who decide to move can transfer their CMHC mortgage insurance from their current property to their new one. Depending on the scenario, their premium could even go down or be eliminated altogether when they take out a new mortgage.

Scenario 1: Insurance premium stays the same

If there’s no change in the terms of the mortgage (down payment percentage, loan amount and amortization period), the insurance premium stays the same.

Scenario 2: Insurance premium goes up

A borrower's premium will go up if the down payment percentage decreases, the loan amount increases or the amortization period is extended.

Scenario 3: Premium credit

If the notarized deeds of sale are signed less than two years apart, the homeowner may get a total or partial refund on the mortgage insurance premium already paid.

 

Period of time between the notarized deeds of sale

Premium credit

(percentage of mortgage insurance premium paid for 1st property)

Less than 6 months

100%

Less than 12 months

50%

Less than 24 months

25%

Source: CMHC

If the notarized deeds of sale are signed more than two years apart, the mortgage insurance can be transferred but no premium credit will be granted.

Want to learn more about mortgage insurance and the portability option? Talk to a mortgage broker, who can give you a clear picture of your financial situation.

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