Quote:
Originally Posted by Hehe
It's based on bank's calculation when processing your mortgage application. They factor the CMHC (or actually apply for such insurance) in if needed.
Say your home is 1M (in both price and how bank values it), you put 200k down and carries an 800k mortgage, no CMHC needed from bank viewpoint.
You are up for renewal, your home is now worth 800k (again, both price and how bank values it), and you have paid down say 50k over the course of 5yrs, so you still need to borrow 750k on mortgage, with 800k in equity. From bank's perspective, it means that now you only have 6.25% of assets/down payment/equity in this mortgage (50/800). So, they could potentially qualify you for a renewal, assuming you still pass their test, but they would apply CMHC as your equity no longer satisfy the condition to go without CMHC.
|
Thanks for the reply, so going by that, if the mortgage is higher than what the value of the property is (value @ 700k, mortgage @750k) you'll have to cough up the extra to make it?
I know it's pretty unlikely to lose 25%+, but you never know.