When refinancing your mortgage, you may wonder if you have to pay Canada Mortgage and Housing Corporation (CMHC) fees. The answer depends on the type of mortgage you have and the lender you’re refinancing with. If you have a high-ratio mortgage (meaning you put down less than 20% of the home’s value), you’ll likely have to pay CMHC fees when you refinance. These fees protect the lender in case you default on your mortgage. If you have a low-ratio mortgage, you won’t have to pay CMHC fees. However, you may have to pay other fees, such as appraisal fees or legal fees.
CMHC and Refinancing
When refinancing a mortgage in Canada, one of the key factors to consider is whether or not you will have to pay Canada Mortgage and Housing Corporation (CMHC) insurance. CMHC insurance is a type of mortgage default insurance that is required on most mortgages with a down payment of less than 20%. If you have CMHC insurance on your current mortgage, you may have to pay a portion of it when you refinance.
The amount of CMHC insurance you will have to pay when refinancing depends on a number of factors, including the remaining balance on your mortgage, the new interest rate, and the term of the new mortgage. In general, you will have to pay a higher amount of CMHC insurance if your new mortgage has a higher interest rate or a longer term.
If you are refinancing a mortgage with CMHC insurance, it is important to factor the cost of the insurance into your decision. You should also compare the cost of refinancing with CMHC insurance to the cost of refinancing without CMHC insurance. In some cases, it may be more cost-effective to refinance without CMHC insurance, even if you have to pay a higher interest rate.
Mortgage Insurance Waiver
When refinancing your mortgage, you may have to pay Canada Mortgage and Housing Corporation (CMHC) mortgage insurance. CMHC insurance is a type of loan insurance that protects the lender if you default on your mortgage.
You may not have to pay CMHC insurance if you have a high credit score and a low loan-to-value (LTV) ratio. LTV is the amount of your loan divided by the value of your home. If your LTV is less than 80%, you may not have to pay CMHC insurance.
- You can get a mortgage insurance waiver if you have a good credit score and a low loan-to-value (LTV) ratio.
- LTV is the amount of your loan divided by the value of your home.
- If your LTV is less than 80%, you may not have to pay CMHC insurance.
- You can contact your lender to find out if you qualify for a mortgage insurance waiver.
If you are not sure if you have to pay CMHC insurance, you should contact your lender. They will be able to tell you if you qualify for a mortgage insurance waiver.
Examples of Situations Where You Might Not Have to Pay CMHC Insurance
There are a few situations where you might not have to pay CMHC insurance, even if your LTV is greater than 80%. These include:
- You are refinancing your mortgage with the same lender.
- You are refinancing your mortgage to consolidate debt.
- You are refinancing your mortgage to make home improvements.
| Situation | CMHC Insurance Required? |
|---|---|
| Refinancing with the same lender | No |
| Refinancing to consolidate debt | No |
| Refinancing to make home improvements | No |
If you are unsure whether or not you have to pay CMHC insurance, you should contact your lender. They will be able to tell you if you qualify for a waiver.
Refinancing Options
Before determining whether you have to pay CMHC when refinancing, it is crucial to understand your refinancing options. These include:
- Rate-and-term refinance: This option allows you to change your interest rate and/or loan term without changing the loan amount.
- Cash-out refinance: This option enables you to borrow additional funds against your home’s equity, which can be used for various purposes such as debt consolidation or home improvements.
- Underwater refinance: This option is available if you owe more on your mortgage than your home is worth. It involves refinancing into a new loan with a lower interest rate or a longer term, reducing your monthly payments.
Determining CMHC Payment
Whether you have to pay CMHC when refinancing depends on the type of refinance, your home’s appraised value, and your current mortgage balance relative to the value of your home.
Here is how the determination works:
- Rate-and-term refinance: No CMHC payment is required if your mortgage balance is less than 80% of your home’s appraised value.
- Cash-out refinance: CMHC premium is required if you borrow more than 80% of your home’s appraised value.
- Underwater refinance: CMHC premium is not required in most cases, as the government guarantees a portion of the new loan.
Table: CMHC Payment Requirements
| Refinance Type | CMHC Payment Required |
|—|—|
| Rate-and-term (mortgage balance < 80% of home value) | No |
| Rate-and-term (mortgage balance > 80% of home value) | Yes |
| Cash-out refinance (borrowing up to 80% of home value) | No |
| Cash-out refinance (borrowing more than 80% of home value) | Yes |
| Underwater refinance | No |
Lenders and CMHC Requirements
When you refinance your mortgage, you may have to pay for Canada Mortgage and Housing Corporation (CMHC) insurance if your new mortgage balance is more than 80% of the home’s value.
CMHC insurance protects lenders against losses if you default on your mortgage. Lenders typically require CMHC insurance on high-ratio mortgages, which are mortgages with a loan-to-value (LTV) ratio of more than 80%.
The amount of CMHC insurance you have to pay depends on the size of your new mortgage and the LTV ratio. You can use the CMHC insurance calculator to estimate your CMHC insurance costs.
Lenders and CMHC Requirements
- Lenders typically require CMHC insurance on high-ratio mortgages (LTV > 80%)
- The amount of CMHC insurance you have to pay depends on the size of your new mortgage and the LTV ratio
- You can use the CMHC insurance calculator to estimate your CMHC insurance costs
Well, there you have it. The ins and outs of CMHC when refinancing. I hope you got all the clarity you needed. Remember, the rules are always subject to change, so be sure to check with a mortgage professional before you make any final decisions. Thanks for stopping by, and I’d love to see you again soon!