Iâ€™m a little bit late on the news there as it was announced late in April, but being on vacation for three weeks makes it hard to follow the banking industry. Anyway, good news for most people, you are now required a minimum of 20% cash down to purchase your property without being insured.
The Government announced the modification to the law from 25% to 20% of cash down required to not be insured. CMHC and GE capital start insuring for only 20% and less the value of the property.
That means that you can not only save on the insurance premium if you have 20% cash down but also that you can refinance your property up to 80% without having to meet the CMHC credit requirement. In general, banks a way smother to qualify their client for a mortgage when they have sufficient cash down to not be insured. It gives them more latitude as to what they can approve or not as they are the only ones bearing the risk of default.
Does it mean that you could setup a bigger Smith Manoeuvre without having to pay insurance premium? I donâ€™t know yet. No Canadian banks offered the 80% financing HELOC yet. But it is sure to come!
That also shows some opening to a more creative mortgage environment from the Government. They probably realize that a lot of financial strategies are based on the equity on the property and it will surely stimulate the house market a little bit more.
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