Emily and James: A New Start with the CMHC Portability Option
Emily and James* own a condominium. With a third child due in six months, space is becoming limited. Therefore, they will move to a larger home. Can they take advantage of the Canada Mortgage and Housing Corporation (CMHC) portability option?
What is the CMHC Portability Option?
First, let's remember that a homeowner must pay mortgage loan insurance if they provide a down payment of less than 20% of the home's purchase price.
Thanks to the portability option, borrowers who move can transfer their CMHC mortgage loan insurance from their current property to another. Depending on the situation, they may even benefit from a reduction or cancellation of the premium when they take out a new mortgage.
Different Portability Situations
Situation 1: Unchanged Insurance Premium
When the mortgage terms, that is, the down payment percentage, loan amount, and amortization period, do not change, the insurance premium remains the same.
Situation 2: Increased Premium
Borrowers will see their premium increase if the down payment percentage decreases, the loan amount increases, or the amortization period is extended.
Situation 3: Premium Credit
When less than two years pass between the notarized sale dates of the two properties, homeowners can get a refund, in whole or in part, of the mortgage loan insurance premium they have already paid.
Premium Refund Details
| Time Between Notarized Sale Dates | Premium Refund (percentage of the mortgage loan insurance premium paid for the first property) |
|---|---|
| Less than 6 months | 100% |
| Less than 12 months | 50% |
| Less than 24 months | 25% |
Source: CMHC
It is possible to transfer mortgage loan insurance if the time between the notarized sale dates exceeds two years, but no premium refund will be granted.
Learn More
Would you like to know more about mortgage loan insurance and the portability option? Feel free to contact us! It is important to understand that certain conditions may apply to all the information presented, and we are here to assist you and answer your questions.
The content of this publication is subject to exclusive copyright in favor of Planiprêt – Mortgage Brokerage Firm, which reserves all rights.
*The names Emily and James are fictitious and used for illustrative purposes only.
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