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My Mortgage Blog

The federal government announced a new mortgage refinancing program designed to help homeowners add secondary suites—such as basement apartments or garage conversions.

The program, which will take effect in January 2025, is intended to increase the supply of affordable rental housing and offer homeowners a way to generate rental income by making it easier to finance the construction or conversion of rental units within their homes.

Under the new program, homeowners can refinance their mortgages under newly updated insured mortgage rules. Starting January 2025, mortgage default insurers like CMHC, Sagen and Canada Guaranty will be permitted to provide mortgage insurance for loans used to build or renovate secondary suites, offering more flexibility for homeowners to borrow against their home equity to finance these projects.

Key details of the program:

  • Launch date: The program will come into effect in January 2025.
  • Refinancing: Homeowners will be able to refinance their existing mortgages with default-insured loans tailored to support secondary suite construction or renovation.
  • Eligibility: The refinanced mortgage must meet the new updated mortgage insurance rules, allowing homeowners to borrow additional funds to cover the costs of creating rental units.
  • Purpose: The program is designed to encourage the development of secondary, self-contained suites, such as basement suites or laneway homes, addressing rental shortages in high-demand urban areas.
  • Insurance backing: Canadian mortgage default insurers will play a key role in providing mortgage insurance for these refinanced loans, helping homeowners secure financing for their renovation or construction projects.

The government hopes this program will help ease the housing crunch by increasing the supply of affordable rental units, particularly in urban areas where housing options are limited and demand remains high. For homeowners, the program provides an opportunity to access competitive refinancing options to fund construction, potentially creating a new income stream through rental income.

Before moving forward, homeowners are encouraged to speak with a mortgage professional to ensure they meet the program's requirements and understand the financial implications of refinancing. The program’s insured nature means that homeowners will need to qualify for mortgage default insurance, and understanding these details will be key in taking advantage of the program.

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