Fortunately, the Canadian Mortgage and Housing Corporation (CMHC) offers insurance products aimed at helping individuals separating or divorcing who are either selling or buying out of a home.
Buyer’s Mortgage Insurance
If you are the individual buying out their former partner’s share of the home, you may be eligible for CMHC’s Buyer’s Mortgage Insurance. This product provides protection for lenders in a situation where the value of the property is not enough to cover the amount financed in case there is a default on the mortgage payments. The premium for this type of insurance varies depending on how much money is being borrowed, what type of property is being purchased, as well as whether it is an owner-occupied residence or an investment property.
Seller Take-Back Mortgage Insurance
For those looking to purchase their ex’s share of the house via a seller take-back mortgage, CMHC also offers Seller Take-Back Mortgage Insurance. This product helps protect buyers by providing third party assurance that if they cannot fulfill their credit obligations and pay back the loan they have taken from their former partner, CMHC will cover any losses incurred by them up to certain limits. As with buyer’s mortgage insurance, premiums for this type of coverage vary based on several factors including loan amount and occupancy status of the property being purchased.
Advantages & Considerations
Using document services like those provided by CMHC can help make divorce proceedings smoother since borrowers no longer have to secure two mortgages through conventional lenders in order to purchase their former partner out of the house – allowing them to avoid large down payment requirements and potentially obtain better interest rates than single applicants would normally get from other sources. That said, when obtaining either type of insurance it is important to understand all terms and conditions beforehand including any fees associated with these products so that you are aware of all costs associated with taking out this type of financing before making any decisions.
Conclusion
Having access to mortgages insured by CMHC while separating from your former partner can provide valuable peace of mind when purchasing real estate during divorce proceedings by reducing your overall risk and providing additional financial protection should something go wrong down the line – making this difficult time less stressful and more manageable!
