A reader asks: If I signed a 35-year CMHC-insured mortgage five years ago, and now I need to renew, what are my options and how am I affected by the new mortgage rules?
This is a great question and is one that James Laid, a mortgage broker at True North Mortgage, gets often. Knowing that, we went straight to the expert!
“If a mortgage is renewed, then nothing is changing,” explained Laird. “You already have CMHC insurance and you don’t need to get it again.”
In other words, if you signed a 35-year insured mortgage prior to the end of 2008, and it’s now time to renew it, you should be able to get a 30-year insured mortgage without issue.
Why might someone ask this question? Over the last few years, a number of Canada’s mortgage rules have changed – including the maximum amortization period available to buyers who require CMHC insurance.
Prior to 2008, Canadians could take out a 40-year insured mortgage – some with as little as 0% down. For better or worse, those days are gone and, as of July 2012, anyone with less than 20% equity in their home is now only eligible for an insured mortgage with a maximum amortization of 25 years.
If someone took out a 35-year insured mortgage 5 years ago, the thought of only being able to access a 25-year mortgage at the time of renewal could be daunting – losing 5 years of payback time for that loan would take a massive chunk out of anyone’s budget.
Fortunately, anyone who bought CMHC insurance before the mortgage rules were changed is safe. If you’re renewing, you should be able to get a 30-year insured mortgage without question.
Do you have a question? Send it to our editor and we’ll answer it as soon as possible!