As we navigate the evolving landscape of the real estate market, recent announcements from the federal government are set to significantly impact housing supply, mortgages, and homeowners. Here’s a breakdown of these crucial updates that you want to know.
Refinancing for Secondary Suites: Effective January 15, 2025
Homeowners will soon have a valuable opportunity to refinance up to 90% of their home’s value (capped at $2 million) through default-insured mortgages specifically for building secondary suites. This initiative aims to increase rental options in high-demand areas and assist homeowners in managing rising mortgage costs.
Key Highlights:
- Maximum Loan-to-Value (LTV): Up to 90% of the “as improved” property value.
- Amortization: Up to 30 years to ease payment burdens.
- Unit Flexibility: Homeowners can add up to 4 units, including the main residence.
- Self-Contained Suites: Each suite must have its own entrance, kitchen, and bathroom.
- Rental Restrictions: Long-term rentals only—no short-term options like Airbnb.
New Mortgage Rules: Effective December 15, 2024
The upcoming changes to mortgage regulations are designed to enhance purchasing power and make homeownership more accessible:
- 30-Year Amortizations: Available for all buyers of new builds, helping to reduce monthly payments.
- Higher Insured Mortgage Cap: The limit is increasing to $1.5 million (up from $1 million), making it easier to qualify with less than 20% down. For example, a $1.5 million purchase will now require a down payment of just $125,000, compared to the previous requirement of $300,000.
Other Key Updates
- Easier Mortgage Switches: Starting November 21, 2024, insured mortgage holders can switch lenders at renewal without needing to undergo a new stress test. This change could help many homeowners secure better rates.
- Tax on Vacant Land: The government is considering a tax on vacant land to encourage development and reduce housing shortages.
- New Development Sites: An additional 14 federal properties are being opened up for housing projects, totaling 70 sites available for new developments.
- New Renters’ and Home Buyers’ Bills of Rights: These initiatives aim to deliver 4 million new homes and strengthen protections for renters and buyers.
Looking Ahead
These changes represent a significant shift in Canada’s housing strategy, marking the largest housing plan in our nation’s history. By fostering opportunities for rental units and new development projects, the government aims to make homeownership more attainable for everyone.
As these policies roll out, stay tuned for further updates. We’re here to help you navigate these changes and provide the best possible guidance to your clients. Let’s embrace these opportunities together!
Written by:
Trevor Bumstead
Mortgage Broker
Dominion Lending Centres TLC Mortgage Group
