CMHC to insure interest-only mortgages in a bid to make ownership easier
The Canada Mortgage and Housing Corp. is cutting the cost of mortgage insurance in a bid to make home ownership easier and cheaper.
The federal agency announced Wednesday that it plans to offer mortgage insurance with a longer repayment period and more flexible repayment options. In some cases, borrowers will be able to devote their entire monthly payment to interest, allowing them to better manage their housing budget.
CMHC will also eliminate, effective immediately, the hefty application fees that it has charged for high-ratio mortgage insurance. These fees typically range from $165 to $235.
"These innovative financial solutions will allow more Canadians to buy homes, and do so sooner," CMHC president Karen Kindley said in a statement. "By reducing costs and increasing flexibility, CMHC continues to help Canadians realize their dreams of home ownership."
The new mortgage insurance will be offered to borrowers with a proven history of managing their credit. They will have the option of paying interest only for up to 10 years when they purchase or refinance their home.
CMHC will also offer insurance on mortgages with an amortization period of up to 35 years, a first for Canada.
And it has cut the cost of mortgage insurance premiums by up to 30 per cent.