New CMHC shared equity mortgages are a bad idea

You probably heard in the news about a new shared equity mortgages program announced in 2019 budget.

It will provide a first time home buyer with additional 5% downpayment on resale properties and 10% on new builds.

Again, they release a program without a clear guidelines on how it will work.

The rules as we know so far:

  • Must be insured by CMHC
  • First time home buyers only
  • Household income under $120,000
  • Maximum mortgage amount $480,000

Leaves many questions unanswered.

  • Must pay back 5-10% of the future sale price or initial amount?
  • What happens if the sale price is lower?
  • Will they pay part of property taxes, maintenance or condo fees?
  • Any improvements will increase value, how will that be reflected?
  • Clients still pay full closing costs and land transfer taxes?
  • CMHC is not the only mortgage isurer, will the other insurance companies be able to participate?

Still too early to tell, but we don’t expect it to have a significant impact on GTA.

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