IRP Real Estate Incentive & - Do they reimburse the CMHC fees??

[Shaynelle]

For when you have less than 25% down you have to pay the CMHC Insurance, which can be a LOT of money ($5,000 or so!).   I'm hoping when you move and have to buy a new house IRP reimburses you for the CMHC Insurance fees - does anyone know if this is true?

Also, has anyone here not sold their res when they moved and took advantage of the real estate incentive?   I have a question for you if you have.

I have the links to the policy and overview and all that stuff for the IRP program, but no where in it does it state "CMHC Insurance fees" or anything similar.  They do talk about "Mortgage default Insurance", so I'm wondering if thats their term for CMHC Fees.  If thats the case it comes from personalized funds anyways, so doesn't matter if they pay for it or not it just comes out of the cash refund you would recieve anyways.

Thanks!!

Shaynelle

 

[Inch]

When I got posted to Shearwater last May, the CMHC fees would have come out of the Custom folder, and they're taxable. The mortgage buydown comes from your personalized folder and it's tax free if used to buy down your mortgage.

At the time, I had received an enormous back pay, plus I was being posted to one of the highest taxed provinces in the country, thus for me to use my custom folder for the CMHC fees, I would have had to pay nearly 50% income tax on that money. So they would have given me $2000, which would have saved me about 5 bucks a month over the course of my mortgage (25years) and I would have had to pay an additional $1000 in income tax this spring. I said no thanks, I wasn't going to miss $5 but I certainly would have felt $1000 in taxes due. If I did it again, I'd do it the same way.

I did use my posting allowance to buy down my mortgage rate, bought it down from 4.65 to 4.25 and it was tax free.

 

[Shaynelle]

Thanks for the info Inch!  If we can swing having more than 25% down we're really going to try so we don't have to use the CMHC financing.

I've heard a few people talk about buying down their mortgage rate, what does this mean exactly?  Does it mean you are putting down more money on your house, and as a result you get a lower interest rate?

Thanks again,
Shaynelle

 

[Inch]

The 25% is a great idea, I just didn't have it so I had to suck it up or move into shacks again (uh, no, have you seen the shacks in Shearwater?   )

When you buy your rate down, literally, you're paying for the percentages, it has nothing to do with the principle mortgage amount. The rate I negotiated was for 5 years fixed at 4.65%, my posting allowance was $2520. The bank has a set rate at which you can buy down the interest rate. In my case, I bought it down to 4.245% or 0.405% lower for a total I think of $2770 (posting allowance plus a few other things they give you). That $2770 was separate from my downpayment, in fact, the money never even touched my hands, IRP sent it straight to the bank, it's only for mortgage rate buydown and when used as such, it's tax free.

So, to sum up, I got a $1XX,XXX mortgage for 5 years at 4.245%, if I hadn't bought the rate down, I would have had a $1XX,XXX mortgage for 5 years at 4.65%. It works out quite a bit cheaper over the long run.

One more thing, you can't buy down variable rates, only fixed rates.