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

Exciting news for Canadians preparing to enter the housing market! Starting December 15, 2024, significant changes to insured mortgage rules will take effect, making homeownership more accessible and affordable. Here’s what’s new and how it could impact your plans.

What’s Changing?

1. Higher Insured Mortgage Cap

The insured mortgage cap will increase from $1 million to $1.5 million, opening doors for buyers in higher-priced markets to qualify for insured mortgages with less than a 20% down payment. This change gives buyers more flexibility and access to affordable financing options in today’s competitive housing market.

2. Expanded Access to 30-Year Amortizations

Previously limited to first-time buyers of newly built homes, 30-year amortizations will now be available to:

• All first-time homebuyers

• Anyone purchasing newly built homes

Longer amortization periods mean lower monthly payments, helping buyers manage housing costs while still securing the home they want.

Why Does This Matter?

These changes aim to address affordability challenges faced by Canadians trying to enter the housing market. Key benefits include:

• Lower monthly payments: A longer amortization period reduces payment amounts, easing budget pressures.

• Lower interest rates: Insured mortgages often come with more competitive rates, further reducing borrowing costs.

More opportunities: The increased cap allows buyers in pricier markets to qualify for financing that was previously out of reach

How Can You Prepare?

If you’re thinking about buying a home—whether it’s your first home or a newly built property—this is the perfect time to start planning. Here’s how to get ready:

• Assess your budget: Understand how these changes could impact your buying power.

• Get pre-approved: Secure your financing early to be ready when the right home comes along.

• Explore your options: Work with a mortgage professional to find the best solutions for your needs.

Let’s chat about how these upcoming changes can help you achieve your homeownership goals. Contact us today for a personalized consultation!