The federal government is rolling out new mortgage changes aimed at addressing Canada’s housing shortage, this time focusing on the development of secondary suites. Starting January 15, 2025, homeowners will be able to tap into up to 90% of their home’s value through a default-insured mortgage refinancing program to build self-contained secondary suites. This move aims to increase rental supply in high-demand areas while giving homeowners a way to offset rising mortgage costs.
Deputy Prime Minister Chrystia Freeland made the announcement, emphasizing that the government is using every tool available to create more homes and make housing affordable for Canadians of all generations.
Key Details of the Refinancing Program:
- Maximum Loan-to-Value (LTV): Homeowners can borrow up to 90% of their home’s value post-renovation, with a maximum property value of $2 million.
- Amortization Period: Borrowers can extend their repayment term up to 30 years.
- Number of Units: You can add up to four units to your property, including the primary residence.
- Self-Contained Units: Secondary suites must be fully self-contained, meeting zoning requirements with a private entrance, kitchen, and bathroom.
- Long-Term Rentals Only: These units must be used for long-term rentals—no short-term rentals allowed, such as Airbnb.
This latest policy follows a series of government efforts to ease the housing crunch, including raising the cap on default insurance and reintroducing 30-year amortizations for certain borrowers. In parallel, Canada’s banking regulator, OSFI, has plans to ease stress test requirements for uninsured mortgage switches, giving homeowners more flexibility when switching lenders.
Unlocking Vacant Land for Housing
In a related effort, the government is working to make vacant land more accessible for development. Consultations on taxing vacant land were announced, targeting underutilized lots and encouraging development. With 14 new properties added to the Canada Public Land Bank, there are now 70 federal sites designated for housing, contributing to the goal of building more homes across the country.
This initiative marks another important step toward addressing Canada’s housing challenges by increasing both housing supply and affordability for homeowners and renters alike.