There have been so many recent changes in the mortgage industry, which is actually quite rare (is this an election year??). The most recent in a string of new changes announced in the mortgage industry has the government announcing refinance changes.
Refinancing to Renovate
Billed as a potential “solution” to the housing crisis, this new initiative allows existing homeowners to refinance their property up to 90% of the value of their home (maximum $2m) for the purposes of building a secondary suite for family or to rent out. Previous rules only allowed up to 80% as an uninsured mortgage. Amortization can be 30 years.
Homeowners can refinance up to 90% of their property value to buils a secondary suite for family or to rent out
Why does it matter that this mortgage is insured?
The value of this type of mortgage being insured is that CMHC, Canada Guarantee and Sagen take on the risk or liability of the mortgage, thereby enabling lenders to be able to offer the best rates. Homeowners will have to pay default insurance on this type of mortgage, similar to any other mortgage with less than 20% down. The insurance premiums homeowners will have to pay remains to be seen.
What is a secondary suite?
Secondary suites must be self contained, meaning separate entrance, their own kitchen and bathroom. Homeowners can add up to 4 rental suites and these cannot be short term rentals.
This is only one of many changes to the mortgage rules this fall. Previous changes proposed recently can be found here in my previous blog post.
To learn more, read the press release, or schedule a call and I'll be happy to talk you through your options.
