New Mortgage Refinancing Rules to Help Homeowners Build Secondary Suites

We’re welcoming news of many important mortgage changes coming into effect in the next few months. The latest announcement by the federal government will see mortgage changes rolled out aimed at addressing the housing shortage by supporting the construction of secondary suites.

Effective January 15^th, 2025, you’ll be able to access up to 90% of your home’s value through default-insured mortgage refinancing to build secondary suites.

The goal is to increase the long-term rental supply in high-demand areas while helping homeowners offset rising mortgage costs.

Important details of the refinancing program include:

• Maximum loan to value (LTV) – The LTV ratio can be up to 90% of the “as improved” property value, with the total property value capped at $2 million
• Maximum amortization period – The maximum amortization for this refinancing is 30 years, allowing borrowers to spread payments over a longer term
• Number of units – Homeowners can have up to four units on their property, including the existing one
• Self-contained units – Each secondary suite must be a fully self-contained unit, meaning it has separate living facilities, such as a private entrance, kitchen and bathroom. This ensures compliance with municipal zoning requirements
• No short-term rentals – The additional units must be long-term rentals, not used for short-term rental purposes such as Airbnb

Additional changes coming into effect later this year

Before the year is out, there are three other important mortgage changes coming into effect that will benefit homeowners and homebuyers:

1. Homeowners who switch lenders when the mortgage term is up for renewal will no longer be subject to stress-test rules – which add a 2% rate surcharge when qualifying for a mortgage – as of November 21^st, 2024. This change should increase competition among lenders, potentially leading to better rates and terms for borrowers.
2. The insured mortgage limit is rising to $1.5 million on December 15^th, 2024, which will expand access for Canadians in high-priced housing markets by helping more borrowers qualify for a mortgage with a downpayment below 20%. That’s an increase from the current insured mortgage cap of $1 million set in 2012.
3. Access to 30-year amortizations will expand to include all first-time homebuyers and all buyers of new builds, including condos, in order to help reduce monthly payments – effective December 15^th, 2024.

Have questions about any of these upcoming changes or your mortgage in general? Answers are a call or email away!