Do you know that buying energy efficient homes is one way to save on your mortgage insurance?
Buying a home is a big investment - and the upfront costs for an energy-efficient home can be even bigger. However, with the mortgage insurance savings, you'll help offset the costs of saving the environment. In the long run, this is a great choice both for the environment and for your wallet.
The Canadian housing market has been breaking records in recent years. If you're ready to jump on the trend and invest in a home of your own, be sure to read this first so you can find out how to save money with energy efficiency. Read on before you start house shopping!
What Is Mortgage Loan Insurance?
Buying a house is costly - you'll need to make your mortgage payments, save up for necessary repairs, and be prepared to pay closing costs. But the most daunting cost of all tends to be the down payment. Saving up that chunk of change can be off-putting to many first-time homebuyers.
That's where mortgage loan insurance comes in. With mortgage loan insurance, you can make a down payment of just 5 percent to buy your home. Most financial institutions offer some kind of mortgage loan insurance to make buying a home a possibility for more Canadians.
With this system, a qualified home buyer can use other types of funding to make their down payment, including loans.
Savings For Energy Efficient Homes
There are added incentives to the mortgage loan insurance to make people more likely to choose environmentally friendly homes.
The Canada Mortgage and Housing Corporation (CMHC), the national housing agency of Canada, offers discounts on energy efficient homes. As long as you choose financing insured by the CMHC, you'll be eligible to save money.
When you use their financing to buy an energy-efficient home, buy a home and then make energy-efficient renovations or make energy-efficient renovations to your existing home, you can get a 10 percent refund for your mortgage loan insurance. You might also be eligible for a premium refund over a long amortization period if one applies to your situation.
Canada's government wants to promote the conservation of energy, so these initiatives exist to encourage everyone with a home to make environmentally-friendly choices.
How to Get the Energy Rebate
If you're considering building or buying an energy-efficient home, here are the steps you'll need to take to get this energy rebate.
1. Get Efficiency Documentation
First, you'll need to figure out just how efficient your house really is, and document it accordingly. Your application can only get processed if you can prove that the home meets the qualifying efficiency requirements.
Houses and Low-Rise Residential Units
For a house or a unit in a low-rise residential building, the space needs to have followed an energy-efficient building program that's CMHC-eligible when it was built. Or, it needs to get assessed by an energy advisor qualified by Natural Resources Canada (NRCan), with the proper EnerGuide rating.
If the builder of your home isn't part of a CMHC-eligible building program for energy efficiency, make sure to have an energy advisor check over your building plans before construction begins. This will help make sure the finished home meets the CMHC requirements after construction is complete.
Required Documents
You'll need to get the right documents to show CMHC. These include the program certification from the energy-efficient building program, which must be CMHC-eligible. Or, you can provide the first page from the EnerGuide performance report, which shows the house's EnerGuide rating.
This documentation needs to be no older than five years from the date you send your application in, in order to get the premium refund. If your supporting documentation is more than five years old, you'll need to get a newer energy evaluation to be eligible.
High-Rise Residential Units
To show that your high-rise residential unit is eligible for the discount, you'll need to get a letter. Have the builder, developer, project engineer, or Natural Resources Canada (NRCan) sign it to confirm that the building meets requirements.
If your mortgage closing date was after January 1, 2013, the building has to be either 5 percent more energy efficient than the territorial/provincial requirements state, or 20 percent more than required to meet the Model National Energy Code for Buildings (MNECB).
If the closing date was earlier than that, it'll have to be 25 percent more than required to meet the Model National Energy Code for Buildings (MNECB).
In the letter, make sure the building address is included, and make sure that the above requirements are confirmed. You can contact the condominium corporation or the developer/builder if you need help getting the letter.
2. Improve Energy Efficiency
You might be looking to buy a house that doesn't yet meet the energy efficiency requirements to get a refund.
In that case, you'll need to go through the Home Inspectors Group to get an EnerGuide rating, then use CMHC-insured funds to renovate. The energy advisor will give you a list of recommendations to follow when you renovate.
3. Get the Mortgage
Now, you're ready to arrange for a CMHC-backed mortgage for your new home.
4. Confirm Improvements
Once the recommended renovations have been made, it's time for a second assessment. This assessment will determine how effective the renovations were for saving energy.
5. Apply for Premium Refund
It's time to apply for the refund you're now eligible for. You can either apply online, or complete a PDF form of the application to send to CMHC by fax. Don't forget to include your supporting documentation.
Ready to Save Money on Your Home?
Energy efficient homes aren't just a trend - they're an important part of the Canadian efforts to reduce emissions and save the environment. An energy-efficient home saves money on your utilities, helps the environment, and gets you a discount on your mortgage insurance. What's not to love?
Do you need insurance for your energy-efficient home? Get a home insurance quote from us today.
