Did you know?
In addition to the provincial and municipal rebates that you may be eligible for when you upgrade your home (windows, furnace, roof, etc…), you could also save on your mortgage default insurance premiums if you buy a green home or upgrade your current one?
CMHC has added environmentally friendly features to the Mortgage Loan Insurance it offers. If your higo-ratio mortgage was insured by CMHC whe you purchased an energy-efficient home, purchase a house and make energy-saving renovations or renovate your existing home to make it more energy-efficient, a 10% refund on the Mortgage Loan Insurance premium may be available. You could also have the added flexibility of an extended amortization (up to a maximum of 35 years) without a premium surcharge.
Is there a catch at all?
Here’s how it works:
If You’re Thinking of Buying or Building an Energy-Efficient Home.
If You Own a Home and are Thinking of Renovating to Make your Home More Energy-Efficient
Although the guidelines are quite general, I called over to CMHC this morning and reviewed a few questions with them about the rubber hitting the road with “green’ home mortgage submissions:
Q: Is it very popular?
A: In the past, it really hasn’t been. They anticipate that it is growing and being a crown corproation they have a vested interest in energy-saving and environmentally-friendly initiatives.
Q: If you’ve owned your home for a few years, can you request a rebate back although you’re not actively refinancing your home at this point in time?
A: The work should be completed within a ‘reasonable time period’ from the date of possession to the time that the work is completed and rebate requested. This is ‘normally within 24 months from the possession date’ but exceptions have been made in rare circumstances.
Q: What’s the largest rebate that you’ve ever seen?
A: They couldn’t tell me specifically (darned privacy laws!) but I was told to imagine the two scenarios below:
Scenario 1: ‘normal income, 5% downpayment’
$300,000 purchase price, $15,000 downpayment. 35-year amortization.
Standard CMHC fee: 2.75% + 0.40% for the extended amortization to 35 years = $285,000 x 3.15% = $8,977.50
Scenario 1, ‘Greened’:
a) Discount #1 -Waive the extra premium for extended amortization. Savings: 0.40% x 285,000 = $1,140.00
b) Discount #2 – 10% discount on the standard CMHC premium. Savings: 0.10 (2.75% x 285,000) = 0.10% x $7,837.50 = $783.75
Total savings for the ‘average joe’ starter home in Calgary: $783.75 + $1,140.00 = $1,923.75.
Not too Shabby!
Scenario 2: ‘Self Employed (no proof of income), 10% downpayment’
$300,000 purchase price, $30,000 downpayment. 35-year amortization.
Standard CMHC fee: 4.75% + 0.40% for the extended amortization to 35 years = $270,000 x 5.15% = $13,905
Scenario 2, ‘Greened’:
a) Discount #1 -Waive the extra premium for extended amortization. Savings: 0.40% x $270,000 = $1,080
b) Discount #2 – 10% discount on the standard CMHC premium. Savings: 0.10 (4.75% x 270,000) = 0.10% x $12,825 = $1,282.50
Total savings for the ‘average joe’ starter home in Calgary: $1,080 + $1,282.50 = $2,362.50.
The savings are even sexier for those of us that are self-employed!
It’s obvious that the savings are available and valuable to both your pocketbook in the initial purchase as well as over the long run as your energy bills drop. Are they likely to offset the entire cost of the renovation? Not likely, but every bit helps! Don’t forget to push for manufacturer, city, provincial and national rebates to compound your savings wherever possible too!
Are you purchasing a new home and want to weigh the differences between going green and not? Maybe you have some questions about how to green your current home that you’re renovating? Contact one of our mortgage specialists today and we’ll be happy to help with your questions and getting you on the right track with the best mortgage product for your needs and the best rates in the market!
To your homebuying success,
James C. Tworek and the Trimor team!
403.802.7207 begin_of_the_skype_highlighting 403.802.7207 end_of_the_skype_highlighting
Self-Employed Professional in Personal Finance, Sales and Marketing with 11 years' experience. Partner, currently working as the Director of Corporate Development for Trimor Home Finance.
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