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Real estate recovery: A look at how financing has changed and where leanding practices are heading
February 2011
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Paula Gasparro, Manager, Business Development,
Multi-Unit Mortgage Insurance, Ontario Region, CMHC |
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By Clare Tattersall
If there can be an upside to the slowdown in the housing market, the apartment sector is where people will find it. After 2009, or the year of bidding wars and overpaying for homes fuelled by extremely low interest rates and the introduction of the HST in Ontario and B.C., sales have finally begun to flatten out and fewer people are trading in their rental units for home ownership. This is good news for those looking to invest in multi-unit properties.
At present, the Canada Mortgage and Housing Corporation (CMHC) is Canada’s only provider of mortgage loan insurance for five or more unit properties, which include rental buildings, retirement homes, licensed care facilities, student housing and condominium construction.
The CMHC’s Paula Gasparro says there are substantial benefits for a borrower to use mortgage loan insurance.
“The first is flexibility and leveraging,” says Gasparro, Manager, Business Development, Multi-Unit Mortgage Insurance, Ontario Region, CMHC. “Borrowers can leverage up to 85 per cent loan to value of the determined lending value with a CMHC insured mortgage. This gives them flexibility in putting less down and deploying their capital elsewhere.”
Another benefit is borrowers can negotiate for beneficial interest rates or preferred interest rates in between conventional and insured financing, says Gasparro. As well, the renewal process is hassle-free for borrowers.
“When their term is up, they can be assured that their mortgage will be renewed,” she says. “They can also again shop our mortgage loan insurance policy to get a beneficial rate because our policy stays in effect for the whole amortization period of the mortgage.”
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