# CMHC refusing to insure fixer-upper house



## keito-ninja (Nov 25, 2016)

My mortgage broker has told me that I cannot get a mortgage lender for the house I want because it has knob and tube wiring, so CMHC will not insure the mortgage loan.

The thing is, we intend on rewiring the house anyway. Is it impossible for a buyer to purchase a house with the intention of fixing it up? If the CMHC refuses to insure loans for houses in poor condition, then how do people house flip? Is it only possible to purchase imperfect homes with unsecured mortgages?


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## marina628 (Dec 14, 2010)

People who flip homes usually pay cash or at least have 20% down .


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## sags (May 15, 2010)

I think a bigger problem would be getting house insurance if there was knob and tube wiring.

No insurance = no mortgage.


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## twa2w (Mar 5, 2016)

keito-ninja said:


> My mortgage broker has told me that I cannot get a mortgage lender for the house I want because it has knob and tube wiring, so CMHC will not insure the mortgage loan.
> 
> The thing is, we intend on rewiring the house anyway. Is it impossible for a buyer to purchase a house with the intention of fixing it up? If the CMHC refuses to insure loans for houses in poor condition, then how do people house flip? Is it only possible to purchase imperfect homes with unsecured mortgages?


CMHC used to, and likely still has, a plan for for purchase plus improvements.
You have to have plan and a contract IIRC, for the improvements. CMHC will assess the house and improvements. If they approve it, they will advance a portion of the mortgage for the purchase, then the balance once the improvements are done. You will have to have a source of funds to carry the cost until the improvements are done.
It has been a while since I have done one of these and I am retired now but I am pretty sure cmhc still funds these.
https://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/hopr/hopr_006.cfm


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## Just a Guy (Mar 27, 2012)

Flippers wouldn't want to pay the cmhc fees as it's a heafty hit to their profits. They look for short term lending options with low costs...cash is king, a heloc on their personal home, etc. Of course getting a traditional (20% down) mortgage is also an option, but cmhc is just kissing $1000's away on something you're supposed to turn over quickly.


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## 319905 (Mar 7, 2016)

keito-ninja said:


> My mortgage broker has told me that I cannot get a mortgage lender for the house I want because it has knob and tube wiring, so CMHC will not insure the mortgage loan.
> 
> The thing is, we intend on rewiring the house anyway. Is it impossible for a buyer to purchase a house with the intention of fixing it up? If the CMHC refuses to insure loans for houses in poor condition, then how do people house flip? Is it only possible to purchase imperfect homes with unsecured mortgages?


Not impossible at all ... I used a broker to get an open mortgage from some lender somewhere with slightly higher rate of course on a fixer upper until I had the old wiring and a few other things that required upgrading upgraded ... then carried on with a regular lender. I'm surprised your mortgage broker didn't suggest something along those lines. If you go that route confirm all the upgrades that are required ... could be more than just the wiring. Fwiw had an older 4 bedroom upgraded at a cost of $6K a few years ago ... I did all the patching that was required after the upgrade ... which may or may not be relevant.


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## Mortgage u/w (Feb 6, 2014)

CMHC as well as GENWORTH and CANADA GUARANTY all offer purchase + improvement. All you need is an estimate of the work needed and your lender will factor that amount into your loan amount. The solicitor will withhold those funds until you advise your lender that the work is completed.


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## OhGreatGuru (May 24, 2009)

It's nice to know CMHC has some standards to protect their (our) liability.


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