The federal government has announced significant changes to mortgage rules, kicking off the new year with initiatives aimed at addressing Canada’s housing shortage. One of the most impactful updates is a new program designed to support the creation of secondary suites, offering homeowners increased flexibility and opportunities.

Starting January 15th, 2025, you can refinance up to 90% of your home’s value through default-insured mortgages to build secondary suites—an excellent way to increase long-term rental supply while offsetting 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

Recent Changes to Keep in Mind

As we move into 2025, here’s a quick recap of three important mortgage changes that took effect late last year, bringing significant benefits for homeowners and homebuyers:

1. Stress-Test Rule Changes: As of November 21, 2024, homeowners switching lenders at mortgage renewal are no longer subject to stress-test rules, which previously added a 2% rate surcharge when qualifying for a mortgage. This change encourages competition among lenders, potentially leading to better rates and terms for borrowers.

2. Higher Insured Mortgage Limit: On December 15, 2024, the insured mortgage limit increased to $1.5 million, expanding access for Canadians in high-priced housing markets. This change helps more borrowers qualify for a mortgage with a down payment below 20%, up from the previous $1 million cap set in 2012.

3. Expanded Access to 30-Year Amortizations: Also effective December 15, 2024, 30-year amortizations are now available to all first-time homebuyers and buyers of new builds, including condos, helping to reduce monthly payments and improve affordability.

West Coast Broker- Shannon Mayhew
Mortgage Broker