On June 2, 2003, Canada Mortgage and Housing Corporation (CMHC), our national housing agency, will introduce 5 new mortgage insurance innovations: Secured Lines of Credit, Rental Refinance, Rental Enhancements, Home Ownership On-Reserve and Affordable Housing Through Partnerships.
CMHC is committed to providing Canadians "access to greater choice and home financing flexibility." These real estate innovations follow other creative financing solutions such as programs for purchasing a home with just 5% down, financing renovations at the time of purchase and, most recently, refinancing the equity in the home. CMHC's electronic mortgage underwriting system, emili, has reduced the time it takes lenders to approve mortgages from days to seconds.
CMHC products also help to ensure there are sufficient low-cost funds in the market to meet customer demand for mortgage lending. CMHC pioneered Mortgage-Backed Securities ( Home Mold Safety Mildew Humidity Condensation Expert Health Advice ) ] (NHA MBS) and Canada Mortgage Bonds , significant steps in the evolution of mortgage funding in Canada.
CMHC provides these descriptions of its 5 new mortgage insurance innovations, designed to expand mortgage lending practices by protecting lenders against losses:
1. Secured Lines of Credit
Increasingly homeowners are using Lines of Credit secured by the equity in their homes as an alternative to traditional mortgages. Lines of Credit offer homeowners greater flexibility in managing their finances at competitive interest rates. Borrowers typically can draw on and repay their Lines of Credit without reapplying or paying interest penalties. A CMHC-insured Line of Credit, will now facilitate access to this type of financing for loans up to 90% of the value of the home.
2. Rental Refinance
Owners of rental properties want a financing solution that will allow them to cost effectively access the equity in their rental properties. CMHC is introducing an insured Rental Refinance product that responds to this need by providing rental property owners with the opportunity to access low-cost funds so they can invest in their properties and undertake repairs, or build and acquire more rental housing. Rental mortgage insurance helps to maintain an abundant supply of rental housing mortgage funding which in turn provides Canadians with sustainable rental housing now and into the future.
3. Rental Enhancements
CMHC is introducing enhancements to its Rental Insurance product to make rental financing more accessible and affordable. For example, rental borrowers can now take up to 40 years to pay back their mortgages allowing them to obtain larger loans. In addition, they can access the full amount of their loan at the time all the units are rented rather than having to wait out a one-year stabilization period. For smaller projects, CMHC will waive or replace bonding requirements when there is an acceptable alternative.
4. Homeownership On-Reserve
CMHC fulfils a unique role in helping all Canadians access housing. With the co-operation of Band Councils, CMHC is piloting a new insurance product that will increase the availability of mortgages at competitive rates for eligible Aboriginal Canadians who are purchasing or renovating their homes without the traditional need to have the loan guaranteed by the federal government. This initiative expands the choice of home ownership financing alternatives on-reserve and will complement existing financing options.
5. Affordable Housing Through Partnerships
Providing Canadians with access to affordable housing requires the efforts of many partners working together. Building on the success of CMHC's Centre for Public and Private Partnerships in Affordable Housing, CMHC is helping make more affordable housing available by offering a range of flexible underwriting and partnership options.
For more information, CMHC invites you to contact your local CMHC office/