CMHC/Genworth Question

[Nir]

Hi All,



A basic question regarding CMHC/Genworth insured mortgages.



Example:



Property appraised value: 1Million

Mortgage principal: 500K

CMHC mortgage insurance fee paid when purchased 3 years ago: 30K (to get a 90% LTV)



If the above property is refinanced up to 80% today meaning equity take out of 300K with no need to have it CMHC insured anymore, what happens to the 30K insurance fee paid 3 years ago?

do you get a portion back or was it "gone"/"already fully used" even one week after closing 3 years ago?



Also, is it more difficult to refinance a property which was CMHC insured when purchased? is the process different/more complicated since you deal with an additional organization in order to release the mortgage?



Thanks,

N.

 

[Thomas Beyer]

Refinance means: new mortgage.

Hence: old mortgage plus an early discharge penalty gets discharged and a new one added !

Hence it doesn't matter if old mortgage was CMHC insured or not.

If you get a new CMHC insured mortgage a portion of the fee paid gets credited to the new fee payable.

 

[Nir]

so if you don't need a new CMHC insured mortgage, just a regular mortgage, then no portion of the 30K fee is paid back to you EVEN if refinance is done only 1 month after taking the CMHC insured mortgage? If this is the case then it is almost always much better to continue with a CMHC insured mortgage when refinancing as the fee was already paid in full on purchase! Otherwise, the fee is not returned not even a portion of it. Thanks.

 

[Thomas Beyer]

[quote user=investmart]then no portion of the 30K fee is paid back to you EVEN if refinance is done only 1 month after taking the CMHC insured mortgage?
correct .. it is paid upfront (and usually added to the mortgage)



you asked about re-fi/increase .. then you either get a partial credit if new mortgage is CMHC insured too .. or nothing if not CMHC insured !

 

[Nir]

Thomas, Can you please elaborate a bit on the "partial credit". I'm assuming by partial you mean like 90% discount(!) if re-fi is done after say 2 years, new loan amount is only say 10% higher than previous principal and new mortgage is also CMHC insured (EVEN if through a new bank now). is this correct?

OR is it much less than 90% discount because there is some CMHC "penalty"/fee associated with re-fi like there is when transferring a mortgage in the middle of the term (is there a "CMHC term" like there is a mortgage term?) THANKS.