The program, first unveiled in October, allows homeowners to refinance up to 90% of their property’s value (capped at $2 million) to build secondary suites intended for long-term rental use, specifically excluding short-term rentals like Airbnb.
In a previous post, Canadian Mortgage Trends examined the pros and cons of the program, concluding that it appears to offer significant benefits for homeowners looking to boost their investments or ease financial pressures by adding a tenant. The initiative also holds potential to create jobs and contribute to the broader housing supply.
However, the program’s details remain unclear, creating uncertainty that has made some brokers hesitant to fully support homeowners seeking to refinance.
“It’s very bare bones,” says Connor Green, a mortgage agent with Concierge Mortgage Group, referring to the limited information and criteria available for the program so far. “Typically with a product of this nature you’d see something much more fleshed out.”
There has also been limited information available to homeowners eager to take advantage of the program, particularly regarding the application process.
The Canada Mortgage and Housing Corporation (CMHC), which is overseeing the program, told Canadian Mortgage Trends, “Interested homeowners should reach out to their lender or mortgage provider.”
Overall details of who will qualify remain vague
Since the program’s January 15 launch, key details remain unclear, including financing logistics, timelines, permit and zoning requirements, and inspection criteria, critics say.
“I think there needs to be more direction on how the funds are going to be managed,” notes Tracy Valko, Principal Mortgage Broker and Founder of Valko Financial. “They’re saying it’s a refinance, but typically with a refinance you give funds on closing … we know that won’t be the case with this but then there needs to be some rollout about what that expectation is.”
Even the program’s very definition of a “distinct secondary suite” remains unclear.
With the core incentive open to interpretation, homeowners face uncertainty when deciding on specific development options, such as a basement suite, laneway house, garden suite, or a simple partition within the home. Each option carries the risk of not aligning with potential future clarifications provided by the government, critics say.
“‘Distinct secondary suite’ is very vague,” notes Green. “Is that an addition? A detached unit? A basement apartment? Is it splitting a basement apartment into two units, three units? … It’s all vague in that sense where I’m not exactly sure what they are looking to finance under this program.”
Opportunity for multi-generational home owners unclear
One demographic that appears to have been overlooked in the initial planning and follow-up information for the program is homeowners seeking to refinance for the creation of multi-generational homes—households that accommodate at least three generations of the same family.
A 2021 Statistics Canada report revealed a sharp rise in multi-generational homes over the past two decades, with their numbers increasing by 50% between 2001 and 2021.
Such homes would also benefit from support to expand but are more likely to focus on projects that accommodate additional family members rather than tenants, such as creating in-law suites or undertaking “non-distinct” expansions.
However, since the federal government’s new Secondary Suites Refinancing Program is specifically geared towards the creation of rental units, it seems, at least for now, to overlook the opportunity to offer refinancing options for this rapidly growing demographic of homeowners.
Looming tariffs add to the uncertainty
Another source of uncertainty is the looming U.S. tariffs, which could drive up the cost of labour and materials needed for renovations under the program.
Shortly after being sworn in on January 20, U.S. President Donald Trump announced plans to impose a 25% tariff on goods imported from Canada, set to begin February 1. While the tariffs might not directly impact renovation projects in Canada, the potential for retaliatory measures and an escalating trade war could disrupt supply chains and increase costs.
“Materials are expensive, labour is expensive in Canada now,” says Valko. “And there’s also the timeline—you don’t want to have a unit half completed and not be able to finish it by the end of the year … I think that’s why lenders are reluctant.”
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Last modified: January 24, 2025