CMHC To Allow 100% Rental Income Allowances For Legal Suites

In a bold move Canadian underwriter, CMHC (Canadian Mortgage and Housing Corporation) has announced it will now allow 100% of rental income generated by legally registered suites. Here is the initial breakdown on using this type of rental income:

• The property must be owner-occupied.

• The property being insured can have only two units (i.e., a duplex or a single home with a legal secondary suite). 

• Rental income cannot be used if the suite is “illegal/non-conforming” but “legal non-conforming” is okay. (Non-conforming means that the suite was grandfathered in before zoning/regulations restricted such units. You can check with the city to confirm if a suite is legal.)

• The suite must be self-contained with its own entrance.

• Property taxes and heat must be factored into the borrower’s debt ratios (which is currently not the case when using rent from legal secondary suites).

• For existing units, there must be two-year history of rental income from the suite. The maximum rental income allowed for qualification is a two-year average of the unit’s rent.

• For new units, a market rent appraisal can be accepted if an appropriate vacancy rate has been applied to the estimated rental income.

• Mortgage applicants must “demonstrate a strong history of managing credit” with a minimum credit score of 680.

For more on this new CMHC initiative please visit: Canadian Mortgage Trends

If you are looking for a referral to a terrific local Okanagan based Mortgage Broker please call or text Jason Neumann of RE/MAX Kelowna at 250.808.7700 

Dependably Yours,

Jason Neumann

Mortgages don't need to be confusing!

Don't be Baffled by Mortgages



Buying a home today is an extremely attractive proposition. Interest rates are at their lowest in decades and the housing market is full of homes to suit just about any budget or family requirement. For most people, though, finding a house will also mean taking on a mortgage.

Sorting through the numerous options available to today's home buyers can be intimidating and baffling for everyone from first-time buyers to long-time owners. The rules seem to change constantly and there's a smorgasbord of terminologies to learn.

Fear not - the basics are fairly simple and there are a host of real estate professionals more than willing to help, with your REALTOR® and the bank's mortgage specialist at the top of the list.

Nonetheless, you will want to at least familiarize yourself with the mortgage process, how to arrange one and the different financing strategies involved.

First, it's necessary to know exactly which kinds of institutions will lend you money. Banks and trust companies lead the pack, but credit unions and private lenders also offer funds.

You may also find yourself in a situation where you can "assume" an existing mortgage held by the seller. Advantages of assuming a mortgage are that you can speed up the buying process because there is less paperwork and also save money in lower legal fees and closing costs. One disadvantage is that the current lending rate may be less than that of the assumed mortgage.

Now that you have an idea who will lend you money, you will need to know about the different kinds of mortgages that are offered. The most common by far is the "conventional mortgage." Lenders will loan you up to 75 per cent of the appraised value or purchase price of the property (whichever is lower), and you must come up with the remaining 25 per cent yourself. Many people save specifically for this purpose but, in some cases, alternate or "secondary" financing may be available.

Full OMREB Story

Sincerely,

Jason Neumann

The Zero Money down 40 year Amortization Mortgages run out effective October 15,2008.

In an effort to protect and strengthen the Canadian housing market, the Governement of Canada has put a deadline on 40 year amortized mortgages. As of October 15,2008 it will a little more difficult for first time buyers to qualify for larger mortgages. It would be a massive understatement to suggest that this measure is being taken to avoid a similar crisis as the US real estate market is currently experiencing. Thankfully, our government recognizes the dangers of making high-ratio financing for buyers today. The following blog post I found on BCMortgage.ca explains in greater detail all the changes being made to the mortgage industry in general by October 15,2008. My hope would be that first time buyers that truly require this type of this mortgage product will do so while they still can.

Sincerely,

Jason Neumann