Apply here to see if you qualify for CMHC Refinance to add a Secondary Suite

Written by

ogcadmin

Published on

January 21, 2025

Click here to see if you qualify for CMHC refinance

Unlock the Potential of Your Home

The Canada Mortgage and Housing Corporation (CMHC) Refinance program offers homeowners a unique opportunity to unlock the hidden potential of their properties by creating self-contained secondary suites. Designed to promote gentle densification, this program provides insured financing that helps homeowners enhance property value while contributing to sustainable community growth.

What is CMHC Refinance?

CMHC Refinance is a financial product aimed at enabling homeowners to refinance their existing properties to fund the construction of secondary suites. These suites provide additional living spaces that comply with legal requirements, making them a valuable asset for homeowners. This initiative supports community densification by increasing housing options while maintaining neighborhood character.

The Eligibility for CMHC Secondary Suite Rental Financing


Eligibility	Description
Loan-to-Value Ratio (LTV)	Up to 4 units, including the existing unit(s). Up to 90% LTV.
Minimum Equity Requirement	N/A
Lending Value	The maximum lending value or as-improved property value must be below $2,000,000
Amortization	The maximum amortization period is 30 years.
Location	Must be located in Canada, be suitable and available for full-time / year-round occupancy and have year-round access, including homes located on an island (via a vehicular bridge or ferry).
Down Payment	N/A
Creditworthiness	At least one borrower (or guarantor) must have a minimum credit score of 600.
Debt Service	Maximum threshold: GDS 39% / TDS 44%.
Interest rate	- The GDS and TDS ratios must be calculated using an interest rate which is the greater of the contract interest rate plus 2 per cent, or 5.25 per cent. - Fixed, capped, and standard variable, and adjustable.
Advancing Options	Progress advances: - Full service: CMHC validation of advances for up to 4 consecutive advances at no cost. - Basic service: Lender validation of advances without preapproval from CMHC.

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Eligibility Requirements

Borrowers

Homeowners must own the property and occupy at least one of the units.
A close relative, such as a spouse, common-law partner, or parent, may also occupy a unit on a rent-free basis.

Properties

Secondary suites must be self-contained, with their own kitchen, bathroom, and living areas.
They must comply with applicable local bylaws and regulations.
The suites cannot be used for short-term rentals, ensuring long-term housing availability.
Not available for loans under the Chattel Loan Insurance Program

Financing Options and Limitations

Purpose: Financing must be used solely for constructing and completing the secondary suite. Equity takeout is not allowed.
Approval: CMHC approval must be secured before construction begins or in the early stages of the project.
Limitations: Loans under the Chattel Loans Insurance Product are ineligible.

Important: Insured financing must be approved by CMHC prior to the start of construction or at least at an early stage.

Additional Surcharges

Amortization periods beyond 25 years incur a 0.20% surcharge.
Blended amortization periods incur a 0.60% surcharge applied to the increase in loan amount.

Advantages of Creating Secondary Suites

Increased Property Value: Secondary suites enhance the value of properties by adding versatile living spaces.
Affordable Housing Options: They provide long-term housing solutions for families and communities.
Sustainable Densification: Secondary suites contribute to smart growth by increasing housing capacity without altering neighborhood character.

Step-by-Step Guide to Access CMHC Refinance

Prepare for Application: Gather necessary documents, including proof of homeownership and plans for the secondary suite.
Submit Application: Apply for CMHC-insured financing through approved lenders.
Obtain Approval: Ensure CMHC approval is secured before beginning construction.
Complete Construction: Use the financing to build the secondary suite according to approved plans.

Tools and Resources Available

Mortgage Calculator: Use CMHC’s online calculator to compare rates, amortization periods, and payment frequencies.
Homeowner Underwriting Centre: Dedicated professionals are available to provide mortgage loan, policy, and application guidance.
- Call: 1-888-Go-emili (1-888-463-6454)

Important Notes for Borrowers

Ensure that all improvements align with CMHC guidelines and are directly related to creating the secondary suite.
Consult with mortgage and construction professionals to maximize the benefits of the program.

Conclusion

CMHC Refinance is a transformative opportunity for homeowners looking to enhance their property’s value while contributing to community growth. By adding secondary suites, you not only increase your home’s utility but also support sustainable housing initiatives. Explore this program today to take advantage of its benefits and unlock the full potential of your property.

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