If you’ve got some extra space in your home—like an unused basement or a garage you could turn into a rental suite—now’s the time to consider making it happen. The cost and hassle of getting the right permits and financing have made it tough in the past, but changes are on the way that could make it easier for homeowners across Canada to add these units and increase their income.
What’s Changing and Why?
Canada’s major cities are changing their zoning rules to make it easier to add new rental suites, thanks to the Housing Accelerator Fund. These changes are designed to increase the number of homes available for Canadians and offer an extra source of income for those, like seniors, who may want to stay in their homes as they age.
The federal government, through its Budget 2024, is tweaking mortgage insurance rules to encourage more homeowners to build additional units. These changes will kick in starting January 15, 2025, and will allow homeowners to refinance their mortgages with insurance, making it easier to finance these projects.
Who Can Benefit from These Changes?
If you already own your property and want to add a rental suite, you might qualify for this new mortgage insurance option. Here’s a quick breakdown of the requirements:
- You Own Your Home: You must already own the property.
- You Live in the Property: Either you or a close relative must occupy one of the current units.
- You’re Adding More Units: You must intend to build additional units (like a basement suite or a laneway house).
- No Short-term Rentals: The new unit(s) must be used for long-term rental only—no Airbnb allowed.
What Are the Financing Details?
This new program will make refinancing easier and cover the costs of building legal, self-contained units that meet all local zoning laws. Here’s what you need to know:
- Number of Units: You can have up to four units in total, including your existing unit.
- Property Value: The value of your property after improvements must be under $2 million.
- Loan-to-Value Limit: You can finance up to 90% of the property’s value, including the new units, combined with any other loans secured by the property.
- Maximum Amortization: You can stretch the mortgage term to a maximum of 30 years.
- Funding Limit: The additional financing can’t exceed the total cost of the project.
When Do These Changes Take Effect?
These new rules will apply to any mortgage insurance applications submitted on or after January 15, 2025. All other standard eligibility rules for government-guaranteed mortgage insurance will still apply.
If you’re thinking about expanding your living space or creating a rental suite, these new rules could make it much more affordable and manageable to do so.
As always, if you’re considering buying or selling a home in Abbotsford, feel free to reach out. We are here to help navigate these new mortgage rules and ensure you make informed decisions that suit your financial goals. Contact us today.
