Second Home and Vacation Property Mortgage Financing
Can I Get a Mortgage for a Vacation Property or Second Home?
Owning a vacation property makes sense on a lot of different levels. It can dramatically reduce the cost of vacations, bring your family closer together, be a good investment, and in some cases even generate rental income. With the Canadian Mortgage & Housing Corporation (CMHC) recently revising their Mortgage Loan Insurance Products for second homes and vacation properties, it is now easier than ever to finance second homes in Canada.
CMHC Mortgage Insurance Features for Second Homes & Vacation Properties
- Available for one unit owner occupied properties located anywhere in Canada
- Access to all CMHC owner-occupied mortgage loan insurance products
- An individual can be a borrower/co-borrower on a maximum of two owner occupied properties that secure CMHC-insured financing
- No additional underwriting requirements or premium surcharges for a second home – standard product specific premiums apply
- Flexible financing options – single advance progress advances and extended amortization periods are available
- CMHC offers mortgage loan insurance premium refunds for homeowners who purchase an energy-efficient home or purchase and make energy-saving renovations to an existing home. See CMHC Green Home for more information.
CMHC Second Home Product Highlights:
| Loan Purpose |
|
| Loan-to-Value (LTV) Ratio | Maximum LTV varies by CMHC product |
| Maximum Amortization | LTV > 80%: 25 years, LTV ≤ 80%: 40 years |
| Occupancy |
At initiation, the property that secures a CMHC-insured mortgage loan must beintended for occupancy at some point during the year by a borrower; or a relative ofthe borrower on a rent-free basis. Lenders must confirm owner occupancy and maintain the confirmation on file. |
| Number of Units | One Unit |
| Maximum Number of CMHC-Insured Mortgages for Owner-Properties | An individual can be a borrower/co-borrower on a maximum of two owner occupied properties that secure CMHC-insured financing. |
| Borrower Eligibility | Permanent Residents including newcomers to Canada. |
| General Property Requirements |
|
| General Guideline for History of Managing Credit | Debt service guidelines vary by CMHC product. |
CMHC Premiums for Owner-Occupied Properties
| Loan to Value (LTV) Ratio | Premium on Total Loan Amount | Premium on Increase to Loan Amount for Refinance |
| Up to and including 65% | 0.50% | 0.50% |
| Up to and including 75% | 0.65% | 2.25% |
| Up to and including 80% | 1.00% | 2.75% |
| Up to and including 85% | 1.75% | 3.50% |
| Up to and including 90% | 2.00% | N/A |
|
Up to and including 95% Traditional Down Payment* |
2.75% | N/A |
|
Up to and including 95% Non-Traditional Down Payment** |
2.90% | N/A |
CMHC Surcharges for Extended and Blended Amortization
Extended Amortization
Add 0.20% for every 5 years of amortization beyond the 25 year mortgage amortization period. Note: After July 9th, 2012, LTV greater than 80% will not be insured for greater than 25 year mortgage amortization.
Blended Amortization
Add 0.50% for a Blended Amortization for Refinance.
*Traditional sources of down payment include: Applicant’s savings, RRSP withdrawal, funds borrowed against proven assets, sweat equity (< 50%of minimum required equity), land unencumbered, proceeds from sale of another property, non-repayable gift from immediate relative, equitygrant (non-repayable grant from federal, provincial or municipal agency).
** Non-traditional sources of down payment include: Any source that is arm’s length to and not tied to the purchase or sale of the propertysuch as borrowed funds, gifts, 100% sweat equity and lender cash back incentives.
Finding out which solution will work best for you is as easy as contacting us about purchasing a second home or vacation property. We will help you determine how to best obtain a home mortgage to finance the vacation property of your dreams!
Please note, all information provided on this page are provided by Home Mortgage Ontario, but should be confirmed by visiting the Canada Mortgage and Housing Corporation (CMHC) website.
Kyle Pearce
Home Mortgage Ontario Agent, M12000636
Phone 519-818-0078
Fax 519-966-6702
Email [email protected]
Office 2985 Dougall Avenue, Windsor, Ontario N9E 1S1
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Located in Windsor, Ontario, we specialize in home mortgages of all types in Essex County and across Ontario.
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