Leveraging CMHC Rental Programs
Over 30% of Canadians currently rely on rental housing as an alternative to homeownership. As Canada’s provider of mortgage loan insurance for multi-unit residential properties, CMHC ensures that Canadians’ rental housing needs are met, and supports government efforts to expand and preserve the supply of rental units across Canada.
To facilitate these efforts, CMHC provides access to preferred rates that can substantially lower borrowing costs for the construction, purchase and refinancing of multi-unit residential properties, making it more attractive for builders and investors to build and hold rental properties. As an example, a fully-leased rental building can secure 5-year rates 1% to 1.5% lower than conventional financing through CMHC, and can also secure 10-15 year rates locked-in at lower rates than 5-year conventional lending rates. The borrower is required to pay an up-front premium for access to these rates, but if the loan is held for more than approximately six to seven years, the rate savings begin to outweigh this fee, with the savings substantially increasing the longer the building is held.
In addition to lower rates, CMHC mortgage loan insurance offers other incentives to encourage the construction, preservation and improvement of rental properties. These include access to higher loan-to-value ratios, lower debt servicing requirements, and reduced lender fees.
Here’s where Ashdown can help – the majority of CMHC-insured loans are offered through life insurance companies and monoline mortgage lenders, and have a unique set of requirements that conventional lenders don’t always ask for. Ashdown Capital brokers have a thorough understanding of eligibility requirements for the various CMHC programs and have an established network of lenders they turn to in this space. We will work closely with you to identify the right lender and the most suitable CMHC program for your project.