Canada to Implement New Mortgage Insurance Rules for Secondary Suites

The Canadian government has announced changes to mortgage insurance rules aimed at enabling homeowners to add secondary suites to their properties. These changes are set to take effect on January 15, 2025. The new rules will allow homeowners to refinance their mortgages with insurance coverage to construct additional units, such as basement suites or laneway homes, provided they meet specific criteria.

Key points of the new rules include:

• Homeowners must already own their properties and occupy one of the existing units, or have a close relative doing so.
• The additional units must be fully self-contained and comply with municipal zoning requirements.
• The maximum number of dwelling units, including the existing one, is capped at four.
• The property's value, once improved, must not exceed $2 million.
• The loan-to-value ratio can be up to 90% of the property's value, including the value added by the secondary suite(s).
• The maximum amortization period is set at 30 years.

These measures are part of the government's broader strategy to increase housing density and provide more rental options across Canada. The initiative is also expected to offer an additional income source for seniors who wish to age in place. The changes were initially announced in the 2024 federal budget as part of efforts to address housing shortages and affordability issues in major Canadian cities.