Upcoming Mortgage Changes: What Homeowners and Buyers Need to Know

The federal government has announced significant mortgage changes set to roll out over the coming months, designed to address Canada’s housing challenges and provide financial relief to homeowners and buyers. Here’s a breakdown of the most impactful updates and how they might benefit you.

1. Access Up to 90% of Your Home’s Value for Secondary Suites

Starting January 15th, 2025, homeowners will be able to refinance their mortgages for up to 90% of their home’s value (default-insured) to build secondary suites. This initiative aims to increase rental housing supply while helping homeowners offset rising costs.

Key Details of the Program:

• Loan-to-Value (LTV) Ratio: Borrowers can refinance up to 90% of the “as improved” property value, capped at $2 million.

• Maximum Amortization: Payments can be spread over 30 years, making financing more affordable.

• Number of Units: Properties can have up to four units, including the primary residence.

• Self-Contained Suites: Each unit must be fully self-contained, with its own entrance, kitchen, and bathroom, to comply with zoning regulations.

• Long-Term Rentals Only: Units must be rented out long-term and cannot be used for short-term rentals like Airbnb.

How This Helps Homeowners:

• Adds a potential rental income stream.

• Supports the creation of affordable housing in high-demand areas.

• Provides a financial cushion by spreading payments over an extended term.

2. Stress-Test Relief for Mortgage Renewals

Effective November 21st, 2024, homeowners who switch lenders when renewing their mortgage will no longer need to pass the stress test, which adds a 2% rate surcharge to qualify.

Benefits:

• Increased Competition: Lenders will be incentivized to offer better rates and terms.

• Easier Switching: Borrowers will have more flexibility to choose a new lender without worrying about qualifying under the stress test.

3. Increased Insured Mortgage Limit

As of December 15th, 2024, the insured mortgage limit will increase from $1 million to $1.5 million. This update helps borrowers in high-cost housing markets qualify for a mortgage with a down payment of less than 20%.

Who Benefits:

• Buyers in cities with skyrocketing home prices.

• Homebuyers with smaller down payments who previously couldn’t qualify due to the $1 million cap.

4. Expanded Access to 30-Year Amortizations

Starting December 15th, 2024, 30-year amortizations will be available to:

• First-Time Homebuyers: Helping them lower monthly payments.

• Buyers of New Builds: Including condos, easing affordability pressures in the growing pre-construction market.

Why This Matters:

• Lower Monthly Payments: Extending payments over 30 years reduces the financial strain of homeownership.

• Encourages New Builds: Supports the development of new housing stock in a tight market.

How These Changes Could Impact You

These updates provide opportunities for a wide range of homeowners and buyers:

• For Homeowners: Refinancing options offer access to equity for home improvements or secondary suites, while stress-test relief makes it easier to shop for better mortgage terms.

• For Buyers: Higher insured mortgage limits and 30-year amortizations improve affordability, particularly in high-demand or high-priced areas.

Have Questions? We’re Here to Help!

Navigating these changes can feel overwhelming, but at EQTY PROS, we’re here to guide you every step of the way. Whether you’re considering a refinance, planning a home purchase, or exploring how these changes might affect your mortgage, we’ve got the answers you need.

Contact us today to learn more!