CMHC Portability

For straight portability, the following 3 criteria must be met:

• The amortization period of the new loan cannot exceed the remaining amortization from the original loan (up to a maximum of 25 years or a 30-year amortization through CMHC Home Start.)
• The new loan-to-value (LTV) is equal to or less than the current LTV of the existing property.
• The new loan amount is equal to or less than the current outstanding balance.

Example

A property was purchased 3 years ago for $600,000 at 94.17% LTV with a 25-year amortization. The current outstanding balance is $550,000.

• The new property purchase price is $500,000.
• A new mortgage is sought for $450,000, and the amortization period will be maintained at 22 years.

What is the premium to be charged?

• Outstanding balance = $550,000.
• New loan = $450,000. This means no new money.
• Current property LTV (original purchase price) = $550,000 / $600,000 = 91%.
• New property LTV = $450,000 / $500,000 = 90% and therefore LTV has decreased.

Since there is no new money, no increase in LTV or increase in amortization, there is no premium to be charged. This qualifies as straight portability.

For portability with increase to loan amount, the following criteria must be met:

• The maximum amortization period will be the greater of the remaining amortization from the original loan (up to a maximum of 25 years or 30-year amortization through CMHC Home Start) or blended amortization (a blended amortization period is subject to a 0.60% surcharge which is applied to the Increase to Loan Amount).**

Example

A property was purchased 5 years ago for $400,000 at 90% LTV with a 25-year amortization period.

• The outstanding balance is $335,000.
• The property was just sold and a new one will be purchased for $500,000 at 90% LTV, and the amortization period will be maintained.

What is the premium to be charged?

• Outstanding balance = $335,000.
• New loan = $450,000, which means $115,000 new money.
• New property LTV = $450,000 / $500,000 = 90%.
• Amortization remains the same.

This means $115,000 (new money) × 6.25% (premium for LTV of 90%) = $7,187.50
or
$450,000 (entire loan amount) × 3.10% = $13,950.00

The first option is less expensive

** Blended amortization: (outstanding balance × remaining amortization) + (new money × up to 25 years or 30 years through CMHC Home Start) / total loan amount

The Portability feature may allow for a Premium Credit to reduce the premium payable on a new CMHC-insured mortgage loan insurance application.

A premium credit is available if a CMHC-insured mortgage loan is ported to a new property within 2 years of the original closing date. Full amortization of 25 years is available or 30 years amortization through CMHC Home Start.

Mortgage loan insurance is portable beyond 2 years; a premium credit will not apply.

Example

A property was purchased 8 months ago for $425,000 at 90% LTV with an amortization of 25 years. The current outstanding balance is $380,000. The previous premium charged was $11,857.50.

• The new property purchase price is $500,000.
• A new mortgage is sought for $450,000 with an amortization of 25 years.

What is the premium to be charged?

• The amortization period is extended to 25 years. Full premium is due on the new loan.
• Previous purchase within 2 years of new purchase = Portability premium credit.

Step 1: Calculate full premium for new loan: $450,000 × 3.10% = $13,950.00

Step 2: Premium paid 8 months ago was $11,857.50.

Step 3: Premium was paid within 12 months, therefore 50% of $11,857.50 which is $5,928.75 will be credited toward the new premium: $13,950.00 - $5,928.75 = $8,021.25 is the premium due.