Starting in January 2025, the federal government will offer a new mortgage refinancing program. This initiative helps homeowners build additional living spaces, such as basement apartments or converted garages. It aims to make it easier for homeowners to create rental units and manage rising mortgage costs.
A similar program ran until 2016, but the government phased it out to cool the housing market. With housing now in short supply, the program is back. Homeowners can create rental opportunities and generate extra income.
The government explains, “New rental suites would provide more homes for Canadians and could provide an important source of income for seniors continuing to age at home.”
Key Program Highlights
Here’s what you need to know about this new refinancing option:
- Eligibility: Homeowners must own their home, live in one unit (or have a close relative living there), and plan to add new rental units.
- Refinancing: Insured refinancing is available to build self-contained units, like basement suites or laneway homes.
- Unit Requirements: The new units must comply with local zoning rules. Short-term rentals, like Airbnb, are not allowed.
- Number of Units: Up to four units are allowed per property, including your primary residence.
- Property Value: The “as improved” property value cannot exceed $2 million.
- Loan-to-Value (LTV): Refinance up to 90% of your property’s value, including the new units.
- Amortization: Loans can stretch up to 30 years.
- Project Costs: Financing cannot exceed the project’s total cost.
Is This Program a Good Fit for You?
Thinking about adding a rental unit? This program could provide the financial support you need. Creating a basement suite, garage apartment, or laneway home can generate rental income. It’s a great way to offset your mortgage costs while maximizing your property’s value.
However, it’s essential to understand the costs and how refinancing might affect your finances. If you’d like to explore your options, reach out today.
