How to save 25% on mortgage insurance
In a world increasingly conscious of environmental issues, every industry is striving to adopt eco-friendly practices. The real estate sector is no exception, with Canada taking a bold step forward through the introduction of the new Eco Plus program by the Canada Mortgage and Housing Corporation (CMHC).
To help Canada reach it’s goal of carbon neutrality by 2050, CMHC has provided incentives to current and future home buyers in the form of refunds on the mortgage default insurance premiums you pay whenever you put less than 20% down.
To eligible borrowers, you will receive a 25% refund on the insurance premium you paid to purchase your home. This isn’t a small amount of money! For example, for a home price of $700,000 with the minimum down payment of $45,000 you would be required to pay a mortgage default insurance premium of $26,200. This means you would receive a $6,550 refund just for purchasing an energy efficient home.
To receive this refund, there are two circumstances where you can qualify under this program:
- Purchase a new home from a developer that meets the eligible building standards.
To qualify, the home must have an energy efficiency certificate that places it in the top 15% of the current housing stock for greenhouse gas emissions rating. The developer or your Realtor will be able to tell you whether they are eligible.
2. By completing energy efficient renovations on an existing home.
A minimum renovation budget of $20,000 must be allocated to energy efficient improvements and must fall within these three categories:
- Building envelope (e.g., insulation, windows, doors, roof, attic, air tightness and foundation)
- Mechanical systems (e.g., HVAC - Heating, Ventilation and Air Conditioning, heat pump systems)
- Renewable energy systems (e.g., solar, wind, geothermal)
How to Get Your Refund
After completing your home purchase, you will have up to 2 years to apply for your insurance refund through CMHC.
Applying is quite simple and hassle-free. Complete the form by either printing or completing online.
Along with your completed application make sure you have documentation to show the home was built or renovations completed up to energy efficient standards. These documents are valid for up to 5 years and can be used by any buyers of your home later on as well (selling feature!). These documents include:
- final certificate from the list of eligible third-party certifications and/or
- paid invoices confirming completed measures and amount spent
- EnerGuide Renovation Upgrade Report and EnerGuide Label (if available)
When you have all this organized, you will email it to CMHC at eemrefund@cmhc-schl.gc.ca.
They will respond to your application to let you know once you’ve been approved.
If you’re looking for more details around CMHC’s Eco Plus Program, you can click here to check out their website.
Have questions on whether this program could work for you? Give us a call or schedule a meeting to discuss more.
Written by:
Cody Rowe
Mortgage Consultant
Dominion Lending Centres
Modern Mortgage Group
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Keywords: First-time home buyer, first home purchase, first-time buyer mortgage, green mortgages, home renovations.
