Faculty & Staff Housing Loan Program
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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.
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.
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
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.
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%||2.8% of mortgage|
|86% – 90%||3.1% of mortgage|
|91% – 95%||4.0% of mortgage|
|Non-traditional down payment||4.5% mortgage|
The potential saving on the purchase of a $600,000 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%)
1st Mortgage (90%)
Total Purchase Price
The CMHC insurance premium payable is $16,740.00 ($540,000 x 3.1%)
Example 2: Faculty or staff member who takes advantage of the FSHL program.
Down payment (10%) + Demand loan (10%) ($60,000 + $60,000)
1st Mortgage (80%)
Total Purchase Price
II. Second Mortgage Interest Rate – CIBC
Qualifications and Conditions
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).
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
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.
The maximum term of the demand loan is five (5) years, with a amortization period of up to twenty-five (25) years.
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:
- If the employment of the applicant staff member with the University is terminated for any reason whatsoever;
- If the home covered by the mortgage is sold at any time before the loan is repaid; or
- 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.
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