Bye Bye CMHC second home program!
Quote:
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The Crown corporation said late Friday it will stop insuring mortgages on second homes, effective May 30. Anyone who has an insured mortgage will no longer be able to act as a co-borrower on another mortgage that CMHC insures. In addition, it will stop offering mortgage insurance to self-employed people who don’t have standard documents to prove their income.
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It'll be interesting how this impacts the market. I know realtors sell clients income properties using this program to avoid the 20% downpayment required. I know buyers move up using this program when they're feeling stuck in their current house. Just buy another one and rent out the current one until it can be sold.
I bought my current house and rented it out first before moving in, had it not been for the second home program I would have had to sell the first house or come up with 20%.
Maybe the biggest factor (and this could happen more down the line) is no co-borrower can have a cmhc insured mortgage. So if a younger person wants to by a home and needs mommy or daddy to go in on the mortgage to help it get approved they better not have CMHC insurance.
Also smaller communities might be impacted, Canmore, Sylvan, Gull, Kelowna, Penticton, places where people might be buying vacation homes. Yeah, not a lot of people buy million dollar Kelowna homes without putting 20% down (and cmhc stopped insuring $1.0 plus properties), but I've seen a few condo's, smaller houses bought with 5-15% down and rented out and used as a vacation home at the same time.