July 14, 2019
October 24, 2018
CMHC stands for Canada Mortgage and Housing Corporation. It is involved in every house purchase in Canada where the buyer has less than 20% down payment. (15% with most Credit Unions)
Think of CMHC as an insurance company FOR THE BANKS. If a buyer, who only puts down 5% on a house or condo purchase, defaults on his mortgage payment, the bank might have to take the house and sell it to recoup their investment. With only 5% down, the margins are too tight, and the bank might lose money.
So CHMC 'insures' the mortgage, and pays the bank whenever the current owner defaults.
Of course, there are fees involved, and the buyer has to pay them. These fees are tacked onto the mortgage.
Also, while this type of insurance is mandatory for all home buyers with less than the 20% down, there are competitors to C.M.H.C., such as Genworth, and Canada Mortgage..... both operating under the similar principles as CMHC.
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