Mortgage Transfer Qualifying Policy Changes
POST - During the latter part of October, 2023 the Canadian Mortgage Insurers (CMHC, Sagen & Canada Guaranty) changed their policies regarding Mortgage Switches/Transfers in accordance to the Federal B-20 Guidelines. The change and enhancements have come to great delight with the Mortgage Broker Industry.
Effective immediately, mortgage lenders are able to qualify insured transfers and insured collateral transfers using the contract rate. Naturally, there are some conditions to this and are they are listed below:
- Must be a transfer of an existing insured mortgage where the borrower paid the default insurance premium.
- The amortization cannot increase and must stay consistent with the original terms of the mortgage
- No more than $3,000 in penalty and/or fees can be capped (added) onto the mortgage at the time of the transfer
Insurable and Uninsurable Transfers will continue to be qualified on the higher of the minimum qualifying rate or the contract rate plus 2%.
What does all this mean you ask? It means that if your mortgage is maturing and was originally insured by one of the Canadian Mortgage Insurers and you paid the insurance premium yourself or was added to the mortgage at the time, you may transfer your maturing mortgage from one lender to another and qualify based on the new contract rate being given by the new lender.
This will enable borrowers to explore their product and rate options leading into their mortgage maturing and improve the ability to qualify for the transfer to get that better product and/or rate moving forward. Up until now, many borrowers have been unable to do a transfer as they were forced to qualify at the new rate plus 2% and with rate increases, this was becoming more and more difficult to accomplish.
This change opens up the door for more Canadian Homeowners to capture a better mortgage structure and cost options so please ensure you explore your options well ahead of your mortgage maturing.
As a Licensed Mortgage Broker, I am armed with numerous lender, product and rate choices to provide you during this exercise.