Industry welcomes CMHC change

THINK OUTSIDE THE BOX:  CMHC announced Monday that it will now consider 100 per cent of gross rental income from a two-unit owner-occupied property when an owner applies for insurance.

The crown corporation announced its most recent mortgage rule change Monday and it’s one, for a change, that will likely be welcomed by brokers.

“In an environment where there has been nothing but tightening of rules, any positive change is welcome,” Ron Butler of Verico Butler Mortgage told MortgageBrokerNews.ca. “The average salaried person who wants to invest in rental properties will benefit.”

CMHC announced Monday that it will now consider 100 per cent of gross rental income from a two-unit owner-occupied property when an owner applies for insurance. The crown corporation will consider annual principal, interest, tax and heat on the second unit when calculating debt servicing ratios.

And according to Butler, both buyers and renters will benefit.

“Any improvement that makes the formula more liberal is good; it allows more people to buy rental properties and there is a distinct need for rental properties in the GTA so it’s all positive,” he said. “I think that may even be the CMHC’s whole point – there is a need for rental property inventory in the GTA.”

It’s a decision that will positively impact housing affordability – especially in the red-hot Toronto and Vancouver markets.

“Secondary rental suites are recognized as a source of affordable housing offered at a cost that is often lower than those for apartments in purpose built rental buildings,” CMHC said in a notice on its website.

by Justin da Rosa   MortgageBrokerNews.ca    29 Jul 2015

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