New Mortgage Refinancing Rules to Help Homeowners Build Secondary Suites

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