Refinance: 90% of house value and 30 years Amortization and basement development

As housing prices continue to climb and mortgage rates increase, many Canadian homeowners are feeling the financial pinch. But the federal government has introduced a new solution: a mortgage refinancing program designed to help homeowners add secondary suites to their properties. This program not only provides financial relief but also aims to ease the housing shortage by increasing the rental supply in high-demand areas. Here’s everything you need to know about how this program works and how it can benefit you.

1. How the Mortgage Refinancing Program Works

The new refinancing program allows homeowners to refinance up to 90% of their property's as improved value, meaning after the secondary suites are built. The total property value is capped at $2 million, giving most homeowners a wide range of options. The program also extends the maximum amortization period to 30 years, allowing borrowers to spread their payments over a longer time, reducing monthly costs.

This means you could potentially increase the value of your home with the development of rental units, all while locking in a favorable mortgage rate and lowering your monthly payments. For homeowners struggling to meet rising mortgage costs, this could be a great way to offset those expenses while contributing to easing the housing crunch in Canada.

2. The Benefits of Adding Secondary Suites

Adding secondary suites not only helps cover your mortgage but also increases your home’s overall value. These units can generate a steady rental income for you, helping to reduce your financial burden. According to the program, homeowners can add up to four units on their property, including the existing unit. Each suite must be fully self-contained with its own entrance, kitchen, and bathroom, which makes it a great option for long-term rentals.

This program is a smart strategy for homeowners looking to invest in their property, as it can boost rental income and property equity over time. Plus, with the restriction that these units must be long-term rentals (not short-term Airbnb-style stays), you’ll ensure a stable and reliable tenant base.

3. The Financial Impact and Refinancing Opportunities

The key feature of this program is the ability to refinance your home’s value *after* the secondary suite is completed. This allows you to borrow more, up to 90% of the home’s future value, which could be significantly higher due to the added units. For example, if your current property is valued at $600,000 and you estimate the value after renovations will be $750,000, you could refinance up to $675,000 (90% of $750,000).

With the extended 30-year amortization period, your monthly payments become more manageable, even if you refinance a higher amount. The rental income from your new secondary suites can help cover the mortgage, which could mean more financial flexibility for you in the long run.

While the refinancing program gives you access to funds, it’s important to budget for the cost of building the secondary suites. The costs can vary depending on the size and scope of the project, but generally, you need to account for construction costs, permits, legal fees, and any necessary upgrades to meet municipal zoning laws.

Planning carefully is essential to ensure that the rental income will cover these costs and make the investment worthwhile. To help you estimate both your refinancing amount and the cost of developing secondary suites, I’ve created a worksheet to guide you through the process.

1. Next Steps: Is the Refinancing Program Right for You?

If you’re a homeowner looking to reduce mortgage costs and generate additional income, this mortgage refinancing program could be the right solution for you. Not only will you increase your property’s value, but you’ll also contribute to solving the housing crisis by adding more rental units to the market. The key to success is careful planning, estimating costs accurately, and ensuring you’re ready for the responsibilities that come with being a landlord.

If you're considering this program and want to explore how it can work for you, reach out to me for personalized advice. I can help you navigate the refinancing process and ensure you make the most out of this opportunity.

 Worksheet: Estimate Your Refinancing Amount & Secondary Suite Development Cost

This worksheet will help you calculate the potential refinancing amount you can access and estimate the cost of adding secondary suites to your property.