| What’s New?
Effective April 19, 2010, the following changes will apply based on changes announced by the Department of Finance earlier this year: Changes to Qualifying Interest Rate Changes to Loan to Value (LTV) Changes Related to Rental Properties Changes to Insured Second Home Criteria |
| Products
CIBC Mortgages FirstLine Mortgages® President’s Choice Financial® Mortgages |
| Details
Changes to Qualifying Interest Rate Applicable to both insured and conventional mortgages including FirstLine Matrix Mortgage SuiteTM, ACCESS Mortgage® and PCF Secured Borrowing Account (SBA). Mortgage Type Qualifying Rate Fixed rate mortgages with a term less than 5 years Greater of MQR* or Contract Rate All variable rate mortgages Greater of MQR* or Contract Rate Fixed rate mortgages with a term 5 years or greater Contract Rate Note: 1) For the FirstLine Matrix Mortgage Suite, the loan portion will be qualified based on the criteria as set out above and the line of credit portion will be qualified at the Mortgage Qualifying Rate (MQR). 2) For the PCF Secured Borrowing Account, the qualifying rate is the Secured Qualifying Rate (SQR). 3) The *‘MQR’ or ‘SQR’ is defined as the Chartered Bank-Conventional Mortgage 5 year rate that is the most recent interest rate published by the Bank of Canada every Wednesday and can be found by clicking on the following link http://www.bankofcanada.ca/en/rates/interest-look.html and then clicking the tick box “V121764” – 5 year mortgage rate within the “Conventional mortgage” section. 4) The Contract Rate includes any discretionary pricing. 5) Applications dated before April 19, 2010 will continue to be adjudicated based on the old rules provided the borrower has a legally binding purchase and sale agreement that’s also dated before April 19, 2010. Changes to Loan to Value (LTV) Insured Mortgages New LTV Effective April 19 Refinances (ETO) 90% LTV Non-Owner Occupied Rental 80% LTVperties LTV Prior to April 19 95% LTV 95% LTV |
| Total Debt Service Ratio for Insured Refinance Mortgages:
The maximum TDSR for insured refinance mortgages is limited to 42% from previous tier system based on bureau scores. Changes related to non-owner occupied rental properties and owner occupied properties with a rental component Conventional Mortgages – non-owner occupied rental properties where the borrower does not own more than 2 rental properties 50% of the gross rental income can still be added to the Gross Annual Income. The option to deduct 30% of the gross rental income from the PITH has been eliminated. Revised acceptable calculation: PITH* (subject property) + other debts service costs + PITH (any other rental properties) Gross Annual Income + 50% of Gross Rental Income (from subject property and any other rental properties) Conventional Mortgages – owner occupied properties with a rental component 50% of the gross rental income can now be added to the Gross Annual Income (previously 80% of the gross rental income could be added to the Gross Annual Income). The option to deduct 30% of the gross rental income from the PITH has been eliminated. Revised acceptable calculation: PITH* (subject property) + other debts service costs + PITH (any other rental properties) Gross Annual Income + 50% of Gross Rental Income (from subject property and any other rental properties) Insured Mortgages – non-owner occupied rental properties and owner occupied properties with a rental component The option to deduct 80 % of the gross rental income from the PITH is no longer applicable. 50% of the gross rental income can now be added to the Gross Annual Income. This applies to owner occupied properties with rental component (combination) properties and all rental properties. Revised acceptable calculation: PITH* (subject property) + other debts service costs + PITH (any other rental properties) Gross Annual Income + 50% of Gross Rental Income (from subject property and any other rental properties) For owner occupied applications with a rental component owner occupancy must be confirmed at the time of application. Rental income from all other rental properties is to be treated in the same manner as other non salaried income. Net income must be supported using the average income from the previous two years showing on the borrower’s Notice of Assessment or audited financial statements prepared by a licensed accountant. *PITH means cost of principal, interest, taxes, and heat plus 50% of the condominium fees, and 100% of site ground rent for leasehold. Changes to Insured Second Home Criteria Insured second homes must be one unit owner occupied properties. Previously the property could have up to 4 units. An insured second home must be owner occupied by the borrower or a relative of the borrower on a rent free basis; owner occupancy must be confirmed at the time of application. |
| Effective Date April 19, 2010 |
| Any Questions? Please contact Daryl Woodill @ 441-0751 |
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