Starting in January 2025, the federal government is launching a new mortgage refinancing program to help you add rental suites to your home—like a basement apartment or a converted garage.

This could be a game-changer if you’re looking to create extra living space and generate some rental income. A similar program ran until 2016 but was phased out when the housing market got too hot. Now, with a shortage of housing, it’s back, offering you a chance to both improve your home and your financial situation.

As the government put it, “New rental suites would provide more homes for Canadians and could be an important source of income for seniors looking to stay in their homes longer.”

• Who can apply? You must already own your home and live in one of the current units (or have a close family member living there) and plan to add new, self-contained units.
• Refinancing: The program lets you refinance your mortgage and tap into your home’s equity to help pay for the project.
• What kind of units can you build? Think of things like basement suites or laneway homes. The key is they need to be fully self-contained and meet local zoning rules. No Airbnb or other short-term rentals allowed.
• How many units can you add? You can have up to four units on your property, including your main home.
• Property value limit: Once the improvements are done, your property’s value can’t exceed $2 million.
• How much can you refinance? You can borrow up to 90% of your home’s value, factoring in the new units.
• Longer payment terms: You can extend your mortgage’s amortization up to 30 years, helping to spread out the cost.

This could be a great option if you’ve been thinking about adding a rental unit or creating more space for your family. But refinancing isn’t something to rush into—you’ll want to understand the costs and how it could impact your finances.

If you’re curious about how this program might work for you, we’re here to help. At First Avenue Financial, we can walk you through the details and help you figure out whether it’s the right fit for your situation. There is still lots of information we are waiting on from the lenders. We will be sure to keep you up to date as this information comes out!