CMHC conditional policy?

[kanabel]

Hi there!

I`ve been recently approved from a chartered bank for refinancing, with condition to pay off some debt on credit line (unsecured), but can leave it open. However, when I attempted to get more money by going through CMHC, I`ve been told that I might be asked from CMHC to actually close that account in order to get qualified. Did anybody else have similar situation and is this within usual CMHC policy?
Thanks for your input!

 

[JimWhitelaw]

We`ve encountered something similar in the past. In order to qualify for an additional investment mortgage, the lender asked us to reduce the limit on an unused and unsecured LOC. The investment mortgage was worth much more to us than the unused credit room so we made the change.

Each lender (and CMHC) is going to set their own requirements for qualifiying you. The situation you describes sounds reasonable if you think about it: You`re asking for a larger mortgage and you`re asking CMHC to insure it for you. As part of their agreement to insure your larger mortgage they want you to eliminate some other debt (or potential debt) in order to stay within the debt servicing criteria they require.

 

[kanabel]

QUOTE (JimWhitelaw @ Dec 2 2009, 10:20 PM) We`ve encountered something similar in the past. In order to qualify for an additional investment mortgage, the lender asked us to reduce the limit on an unused and unsecured LOC. The investment mortgage was worth much more to us than the unused credit room so we made the change.

Each lender (and CMHC) is going to set their own requirements for qualifiying you. The situation you describes sounds reasonable if you think about it: You`re asking for a larger mortgage and you`re asking CMHC to insure it for you. As part of their agreement to insure your larger mortgage they want you to eliminate some other debt (or potential debt) in order to stay within the debt servicing criteria they require.

Thanks Jim