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Faculty & Staff Housing Loan Program

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Introduction


This program is restricted to the University of Toronto‘s faculty and staff members. For the purpose of this program, the University’s bank of record is the Canadian Imperial Bank of Commerce Main Branch at Commerce Court West , Toronto(“CIBC”). Please note that this program is only offered at CIBC Main Branch. Other branches are not aware of this program.

1.0 Purpose and Methodology

The purpose of the Faculty and Staff Housing Loan Policy (“FSHL”) is to assist qualified members of faculty and staff to finance the purchase of a family home, by providing loans when required, in excess of a first mortgage (usually 80% of purchase price). The financing is in the form of a demand loan from the Canadian Imperial Bank of Commerce Main Branch at Commerce Court West, Toronto (“CIBC”), which is guaranteed by the University of Toronto (“University”). The guarantee is secured by a registered second mortgage (not greater than 15% of purchase price) on the property.

2.0 Primary Conditions

The total amount of the demand loan plus the amount of the first mortgage loan cannot exceed the lesser of 90% of the appraised value or the purchase price of the property.The faculty and staff member is required to insure the building to the amount of not less than its full replacement value. The insurance policy must also disclose the University as a mortgagee on the property. He/she must also provide satisfactory proof of such insurance at inception of the demand loan and at each renewal date during the term of the demand loan.

3.0 Eligibility

The FSHL program is open to all full time continuing faculty and staff, and it is reasonable to expect that the faculty / staff will remain in the employment of the University of Toronto.

4.0 Administration

The FSHL program is co-administered by CIBC, who apply their normal credit standards for mortgage applications. The maximum amount of the demand loan is established by the Vice-President, Human Resources and Equity. The current limit is $65,000. The CIBC ensures that the total debt service of the two loans does not represent an unreasonable proportion of the employee member’s family income.

5.0 Program Overview

This overview is intended to highlight the workings of the FSHL program. Complete details are described in the Policy and Regulations sections located below.

5.1 General Information

To qualify for the FSHL program, applicants must supply personal equity (down payment) of at least 10% of the purchase price of the property to be financed. The faculty or staff member need not be a first time home buyer. The loan can be used to purchase or build a home. The home to be financed must be the applicant’s principal residence during the term of the demand loan (no cottages, summer homes, etc.), and be within commuting distance of the applicant’s place of employment with the University.

5.2 Procedures

To be considered for the FSHL program, the faculty or staff member must complete the required application form, which can be obtained online or by contacting the FSHL Administrator . There is no obligation to participate in the FSHL program if the application form is approved by the FSHL Administrator. Upon approval by the FSHL Administrator, the faculty or staff member will be eligible for credit consideration by CIBC, the University’s bankers. The demand loan is a contractual commitment between the CIBC and the faculty/staff member. The onus is on the faculty/staff member to satisfy CIBC, of his/her ability to carry the debt, which is subject to his/her ability to satisfy CIBC’s normal credit requirement. If he/she is approved by CIBC, the University of Toronto will provide CIBC with a guarantee on the demand loan. As collateral for its guarantee, the University requires the faculty/staff member to execute a second mortgage in its favour (i.e. the University of Toronto being the Mortgagee). Cassels, Brock & Blackwell, legal counsel to the University, will prepare the second mortgage at a fee (currently $474.60) to be paid by the applicant.

6.0 Program Advantages

The program has two potential cost saving advantages as numerated below:

I. Elimination of the CMHC Insurance Premium

Under the FSHL program, the faculty or staff member can obtain a first mortgage at any financial institution, including the CIBC. The demand loan guaranteed by the second mortgage must be with the CIBC. Whether both the first mortgage and demand loan are, or only the demand loan is with the CIBC, the University’s guaranteed demand loan will be considered as part of the faculty/staff member’s down payment on the property. Depending on their personal situation, this may relieve him/her of having to pay the Canada Mortgage and Housing Corporation (CMHC) insurance premium chargeable on any property on which the purchaser has less than 20% equity/down payment.

The CMHC insurance premium is calculated on a tiered basis as shown below:

Mortgage (% of purchase price) CMHC Insurance premium rate
81% – 85% 1.75% of mortgage
86% – 90% 2.00% of mortgage
91% – 95%

Traditional down payment

Flex down payment

2.75% of mortgage

2.90% mortgage

The potential saving on the purchase of a $250,000 home is demonstrated in the examples below:

Example 1: Faculty or staff member who does not take advantage of the FSHL program.
Down payment (10%)
$ 25,000
1st Mortgage (90%)
$225,000
Total Purchase Price
$250,000

The CMHC insurance premium payable is $4,500.00 ($225,000 x 2.00%)
Example 2: Faculty or staff member who takes advantage of the FSHL program.
Down payment (10%) + Demand loan (10%) ($25,000 + $25,000)
$ 50,000
1st Mortgage (80%)
$200,000
Total Purchase Price
$250,000

The demand loan will be treated as part of the faculty/staff member’s down payment, bringing it to 20% of the purchase price to meet the minimum requirement for eliminating the CMHC insurance premium. The faculty/staff member saves $4,500 in CMHC insurance premium costs, less legal fees for setting up the guarantee for the demand loan.

II. Second Mortgage Interest Rate – CIBC

For the purpose of this program, the University’s bank of record is the Canadian Imperial Bank of Commerce Main Branch at Commerce Court West, Toronto (“CIBC”). While not obligated to obtain a first mortgage from CIBC, there is a benefit in doing so.

If the first mortgage is obtained from CIBC and a “closed” fixed interest rate is chosen, the faculty or staff member can obtain the same fixed interest rate for the demand loan (typically, the demand loan or second mortgage interest rate is higher than the rate on a first mortgage). The demand loan will be “open”, so that should the faculty or staff member wish to make extra payments on principal (there is a minimum requirement) during the year, there will be no penalty charged, and no notice is required.

For more information, please review the Policy, Regulations, and Application form.

The information contained on this website is for information purposes only.

Policy

This program is restricted to University of Toronto Faculty and Staff . For the purpose of this program, the University’s bank of record is the Canadian Imperial Bank of Commerce Main Branch at Commerce Court West , Toronto (“CIBC”). Please note that this program is only offered at CIBC Main Branch. Other branches are not aware of this program.

The purpose of the University’s Faculty and Staff Housing Loan Program (“FSHL”) is to provide loans to qualified members of the faculty and staff for the purchase of a family home within a reasonable commuting distance of their place of work.

The financing is in the form of a demand loan from the Canadian Imperial Bank of Commerce Main Branch located at Commerce Court West, Toronto (“CIBC”), guaranteed by the University of Toronto (“University”). This guarantee is secured by a registered second mortgage on the property.

The program is co-administered by the Financial Services Department at the University and CIBC, who apply their normal credit standards for mortgage and loan applications. The total amount of the first mortgage loan plus the guaranteed demand loan cannot exceed the lesser of 90% of the appraised value or cost of the property. The remaining 10% must be personal equity. The maximum amount of the demand loan guaranteed by the University is $65,000. The limit is established by the Vice-President, Human Resources and Equity. The CIBC also ensures that the total debt service of the two loans does not represent an unreasonable proportion of the faculty/staff member’s family income.

The information contained on this website is for information purposes only

Regulations

This program is restricted to the University of Toronto’s faculty and staff members. For the purpose of this program, the University’s bank of record is the Canadian Imperial Bank of Commerce Main Branch at Commerce Court West, Toronto (“CIBC”). Please note that this program is only offered at CIBC Main Branch. Other branches are not aware of this program.

In co-operation with the Canadian Imperial Bank of Commerce Main Branch located at Commerce Court West, Toronto (“CIBC”), the University of Toronto (“University”) has established a program whereby it will assist staff members, who are eligible under the University of Toronto Faculty and Staff Housing Loan Program (“FSHL”), in the purchase of a home or the refinancing of an existing home. The qualifications and conditions, general information and procedures for the FSHL program are subject to change by the University and CIBC without notice.

Qualifications and Conditions

In order to qualify for housing loan assistance under the FSHL program, applicants are required to meet certain University and CIBC terms and conditions, which include:

1. Applicant Eligibility – Eligible Employees

Applications for the FSHL program will be considered from fulltime academic staff members and fulltime continuing administrative staff members of the University (acting individually or jointly with another) who, it is reasonable to expect, will remain in the employment of the University.

2. Home Eligibility

a. Commuting Distance

The home to be purchased or refinanced may be owned by the applicant either individually or jointly with another person (or by the applicant’s spouse) and must be within daily commuting distance of the applicant’s employing campus (St. George, Scarborough, or Mississauga).

b. Principal Dwelling

The home must be actually occupied by the applicant, bona fide as his or her principal residence during the term of the demand loan.

c. Houses to be Constructed

An application in respect of a house not yet built will be considered for financing provided that a fixed price and completion date for occupancy are agreed upon in advance and provided that the house is to be constructed by a qualified builder who is registered under the Ontario New Home Warranty Program (ONHWP).

d. Condominiums

Except for condominiums and townhomes where an individual does not take possession of an actual unit, condominium apartments and townhomes will be considered.

e. Mortgage Requirement

The home to be purchased or refinanced must be capable of being mortgaged to the University.

f. Co-Operative Shares

The purchase of shares in a housing co-operative does not qualify under the Program , since one does not receive title to a unit, rather, one buys shares in the corporation that owns the building, and the cooperative must approve the purchase and sale of any units.

3. Equity Requirement

Equity

The applicant must supply personal equity of at least 10% of the purchase price of the property. The equity must be derived solely from the applicant’s own resources, without borrowing, and is required to be free of any direct obligation relating to or affecting the mortgaged property.

4. Loan Conditions

a. First Mortgage Loan

The applicant may arrange to obtain a first mortgage loan from CIBC or from any other major lending institution. Such first mortgage must not exceed certain limits as may be determined by the University from time to time.

b. Demand Loan

If a first mortgage loan has been obtained from CIBC in accordance with the above mentioned loan condition, the applicant is eligible for a demand loan where there is a choice between a fixed or floating interest rate. If a first mortgage loan has been obtained from another major lending institution in accordance with the above mentioned loan condition, the applicant is eligible for a demand loan from the CIBC with a floating interest rate. The demand loan must not exceed certain limits as may be determined by the University from time to time.

c. University Guarantee

To assist staff who would not otherwise qualify for a mortgage due to non-resident issues and/or would incur Canadian Mortgage and Housing Corporation (“CHMC”) insurance costs, the University guarantees the repayment of the demand loan to CIBC.

d. Term

The maximum term of the demand loan is five (5) years, with a amortization period of up to twenty-five (25) years.

e. Repayment

Repayment on a demand loan will be made in equal blended monthly instalments to include principal and interest according to an amortization plan not to exceed twenty-five (25) years.

f. Open Loan

The demand loan to be established is “open” on any monthly payment date, so that no notice is required should the applicant wish to make a lump sum payment on any such date; and no bonus or penalty is charged in respect of any such payment.

g. Bank Credit Analysis

As a separate condition for the granting of the demand loan, the Bank requires that the applicant meet its guidelines of credit analysis and gross debt servicing ratios.

h. Unregistered Condominiums

If the demand loan is to be advanced for the purchase of a condominium unit before registration of the condominium plan, certain University requirements must be fulfilled, including an undertaking from the applicant as to the execution and registration of the mortgage and an undertaking by the vendor or its solicitors to hold all deeds and title documents on behalf of the University prior to the registration of the condominium plan.

i. Misstatement of Facts

The University’s arrangements with the CIBC are such that if, at any time during the demand loan, as the case may be, it becomes apparent to the University that a misstatement of fact was made by the applicant upon which the CIBC relied in granting such loan, or upon which the University relied in giving its guarantee and the correct facts would have adversely affected the granting of such loan or guarantee, then the CIBC or the University may require immediate payment from the staff member of the balance owing on the loan.

j. Release of Funds

The CIBC cannot release the loan proceeds to the applicant until the loan and mortgage documents have been signed and all requirements of the CIBC and the University’s solicitors have been met.

5. University Guarantee and Mortgage Security

a. Collateral Mortgage

In consideration of the University guaranteeing the demand loan, the applicant is required to provide collateral security by executing at his/her own expense, a registered second mortgage in favour of the University.

The mortgage will be prepared and registered by the University’s solicitors for a fee (currently $474.60) to be paid by the applicant. The University’s solicitors will also require the applicant’s solicitor to furnish a confirmation of the applicant’s good title to the mortgaged premises and as to other legal matters.When the loan is repaid in full, a discharge of the mortgage will also be prepared and registered by the University’s solicitors for a fee (currently $301.27) to be paid by the applicant.

b. Termination of Guarantee

The University’s guarantee will be withdrawn and the applicant may be required, at the University’s option, to repay the CIBC and make alternative financing arrangements, in any of the following circumstances:

  1. If the employment of the applicant staff member with the University is terminated for any reason whatsoever;
  2. If the home covered by the mortgage is sold at any time before the loan is repaid; or
  3. If any of the other terms or conditions of the FSHL program is breached.

In the case of termination of employment (1. above), repayment shall be made within six months thereafter.

c. Property Insurance.

The applicant will be required to insure the building to the amount of not less than its full replacement value. The applicant is required to add the University as a mortgagee on the insurance policy, and provide satisfactory proof of such insurance at inception of the demand loan and at each renewal date during the term of the demand loan.

The information contained on this website is for information purposes only.

Application Forms

This program is restricted to University of Toronto faculty and staff members. The information on this site is for information purposes only.

The application form is available in MS Word and PDF formats.

Submit the completed form to:

Financial Analyst
Trust Accounting & Treasury
215 Huron Street, 2nd Floor
Toronto, Ontario
M5S 2A1
Tel: (416) 946-3371
Fax:(416) 978-5572

Contacts

Below please find contact information for the Faculty & Staff Housing Program. The email address can be found by clicking on the staff member’s name.

Financial Analyst 416-946-3371