3 Nov

Boost Your Income and Property Value with The Secondary Suite Refinance Program

Posted by: Michael Greene

Ontario’s New Secondary Suite Refinance Program is designed to expand the availability of affordable housing by offering financial aid to homeowners interested in adding secondary suites. These suites, commonly referred to as accessory dwelling units (ADUs), can be a great asset to your property, providing extra income while helping address the housing shortage.

Program Highlights

The Secondary Suite Refinance Program provides several important benefits to qualifying homeowners:

Up to $40,000 in forgivable loans, covering 50% of the costs to build new secondary suites.
Homeowners can now refinance up to 90% of their home’s value, including the potential value of the secondary suite they plan to build. This allows them to borrow a larger sum of money by tapping into the increased value of their property.
The refinanced mortgage can be amortized over a period of up to 30 years, making monthly payments more manageable for homeowners. This longer amortization period spreads the loan out over a longer time, reducing financial strain.
To ensure that homeowners across all regions can take advantage of the new regulations, the government has increased the mortgage insurance limit to $2 million. This applies to those who are refinancing specifically to build a secondary suite, providing flexibility for homeowners in higher-priced housing markets.
Supports the creation of basement apartments, laneway houses, and garden suites.
Encourages affordable rentals by requiring units to be rented below market rates.
Promotes accessible housing by providing support for building suites that cater to seniors and people with disabilities.

Who Can Apply

To be eligible for the Secondary Suite Incentive Program, homeowners must meet the following conditions:

Must be the registered owner and occupy the property as their main residence.
Have a combined annual income of less than $209,420 for all property owners.
The property’s assessed value must be below the homeowner grant threshold (set at $2.15 million in 2024).
Acquire all necessary building permits from local authorities before starting construction.
Rent out the unit at a rate below the market average for a minimum of five years to receive loan forgiveness.

How to Apply

Follow these steps to successfully apply for the Secondary Suite Incentive Program:

Assess Your Property: Evaluate the potential for adding a secondary suite and consult local zoning regulations to ensure compliance.
Secure Funding: Explore financing options to ensure you can cover your portion of the construction costs.
Obtain Permits: Submit the necessary permit applications to your local municipality, ensuring your plans meet all zoning and building code requirements.
Submit Your Application: Complete the program’s application form, providing all required documents, including income proof, property ownership details, and building permits.
Build the Suite: Once your application is approved, begin construction. Ensure all work is inspected and meets required standards.
Rent the Unit: Upon completion, rent the suite at the below-market rate for at least five years to qualify for loan forgiveness.

What is a secondary suite?

A secondary suite is a self-contained living space located within a single-family home or on the same property. It typically includes its own separate entrance, kitchen, bathroom, and living areas, making it independent from the main household. These suites are often referred to as basement apartments, in-law suites, or granny flats.

Secondary suites can be created by converting existing spaces, such as basements, garages, or attics, or by building a new structure like a coach house or laneway home on the property. They provide additional housing units within a residential area and can be rented out to generate extra income or used to accommodate family members, such as elderly parents or adult children.

In many cities, the construction of secondary suites is regulated by local bylaws, which specify requirements such as minimum size, zoning, and safety standards. These units are increasingly popular as a solution to housing shortages and as a way for homeowners to make more efficient use of their properties.

Primary unit and secondary unit examples.

Why Build a Secondary Suite?

There are several benefits to adding a secondary suite to your property:

Extra Income: Generate rental income to help with your mortgage or other expenses.
Boost Property Value: Increase your home’s value by adding a rentable unit.
Contribute to Affordable Housing: Help provide affordable housing options within your community.
Housing Flexibility: Use the unit to accommodate family members, like elderly parents or adult children, while maintaining privacy.

Questions to ask when Considering Building a Rental Suite?

Is there demand for rental housing in your neighborhood?

Have you researched how much it will cost to build your suite?

Have you spoken to your lender about financing options?

Can you afford to build a suite, even if there are delays or additional costs?

Can you meet all zoning requirements?

Can you meet all building code requirements?

Do you want to be a landlord and rent the suite out long-term?

Can you afford the mortgage or loan payments if the suite is not rented for a few months?

Conclusion

The Secondary Suite Incentive Program in Ontario provides a valuable opportunity for homeowners to improve their financial situation while making a positive impact on the community. By understanding the program’s requirements and following the application steps, you can successfully develop a secondary suite that benefits both your family and the wider community.

Thinking of taking on a project like this?

Partnering with a knowledgeable mortgage broker like Mortgage With Mike will empower you to make informed decisions. Your mortgage is a fundamental aspect of your financial future, and it’s essential to ensure it’s built on solid ground.

Get in touch with us today to discover how we can assist you on your journey to homeownership.

24 Jul

How the Bank of Canada Rate Cut Will Impact Your Mortgage?

General

Posted by: Michael Greene

Understanding the impact of the Bank of Canada rate cut on your mortgage is important. In an increasingly complex mortgage market, one major factor influences many Canadians’ ability to own their homes: interest rates. The recent drop in the Bank of Canada’s (BoC) prime rate by 25 basis points to 4.5% has a significant ripple effect on mortgage costs, impacting both current homeowners and prospective buyers. In this blog, we’ll explore the intricate relationship between interest rates and mortgages, providing you with the insights you need to navigate this evolving landscape.

The Prime Rate and Its Wider Implications

Many Canadians believe that the Bank of Canada prime rate is the primary driver of mortgage interest rates across the country. However, mortgage interest rates—especially fixed rates—are influenced by a myriad of broader economic factors and trends. Notably, changes in the Band of Canada prime rate also affect the interest rates that banks and credit unions offer on savings accounts and other loans, including credit cards. When the prime rate shifts, mortgage lenders typically adjust their rates accordingly.

For instance, most lenders will raise their standard variable or decrease rates in line with any changes in the prime rate. Conversely, variable rate mortgages will adjust based on the prime rate. However, the most noteworthy recent change has been in the 5 year fixed-rate products, which have shown a notable decline after the BoC interest rate increases.

Bank of Canada Rate Cut Impact on Existing Mortgages

For current homeowners, a drop in the prime rate can directly impact monthly mortgage payments, particularly for those with variable or tracker-rate mortgages. The Bank of Canada rate cut impact on mortgages means that if your mortgage is linked to the prime rate, you might see a reduction in your payments, which can free up some financial space in your budget.

On the other hand, if you have a fixed-rate mortgage, your payments remain unchanged, providing stability in this fluctuating market. Fixed-rate mortgages allow homeowners to know exactly what their monthly payments will be for the agreed-upon term, protecting them from unexpected increases.

Interestingly, the recent drop in the prime rate has influenced fixed rates positively, with some lenders lowering their fixed-rate offerings, even though they remain higher than they were just a year or so ago. If your fixed mortgage is set to expire soon, it’s wise to explore your options for refinancing, as current rates might still offer a more favourable deal.

Taking Control of Your Mortgage Strategy

With the BoC’s prime rate now at a lower point, homeowners should take the opportunity to reassess their mortgage and overall financial strategy. Here are a few steps you can take:

Explore Fixed Rate Stability: If you’re currently on a standard variable rate or an adjustable rate mortgage, now might be an ideal time to consider switching to a fixed-rate mortgage. This could provide the stability and predictability you need in today’s market.
Balance Stability and Security: If you’re already in a fixed-rate mortgage, think carefully before making any changes. While these products offer security against rising rates, they can come with penalties for early repayment, which may limit your ability to take advantage of falling rates.
Forecast Your Financial Future: Consider your long-term financial goals and any potential changes in your life circumstances, such as career shifts, family growth, or home renovations. Aligning your mortgage strategy with your broader financial vision is crucial.
Unveil Alternative Options: Look into alternative mortgage products, such as reverse mortgages, which use your age and equity to give you a no payment option, or hybrid options that combine stability with flexibility.
Seek Expert Guidance: Navigating the mortgage landscape can be daunting, especially with recent changes. Our experienced team at Mortgage With Mike is here to help you understand the diverse range of mortgage options available to you.

Guiding Aspiring Homebuyers Through Bank Of Canada Rate Cut

For many Canadians, the most significant hurdle in becoming homeowners is saving for a down payment. However, fluctuating interest rates, particularly with the recent BoC adjustments, can also present new challenges. As lenders adjust their affordability criteria in response to rising living costs, it’s essential to understand how the Bank of Canada rate cut impact on mortgages might affect your borrowing capabilities. The most important factor to consider of qualifying is the stress test, which is measured by the mortgage debt ratios.

This is where expert advice becomes invaluable. A knowledgeable mortgage broker can help you assess your risk tolerance regarding interest rate changes and tailor a mortgage plan that aligns with your financial aspirations.

Navigating the Market: Practical Steps

As you navigate the dynamic mortgage landscape, here are some practical steps to consider:

Stay Informed: Keep an eye on announcements regarding the prime rate. Our experts can help you interpret how these changes impact your mortgage.
Review Your Mortgage Regularly: Conducting regular reviews of your mortgage can help identify opportunities to adjust your financial strategy. Sometimes, it may be worthwhile to pay a fee to exit an existing mortgage if you can secure a better rate.
Consult Experts: For potential homeowners, seeking expert advice is crucial. Our website offers tools like a mortgage calculator to help you understand how rate changes will impact your monthly payments. Our team can guide you on how these shifts influence your borrowing capacity.
Consider Your Future: Major life events can significantly affect your mortgage strategy. Always consider these factors in your decision-making process.
Explore Mortgage Options: Don’t settle for the first mortgage option you encounter, especially when it’s time to remortgage. Explore various products to find the one that suits your needs best.

As we continue to navigate this unpredictable journey of interest rates, our commitment to your financial success remains steadfast. Whether rates rise or fall, the Bank of Canada rate cut impact on mortgages will influence your decisions. Partnering with a knowledgeable mortgage broker like Mortgage With Mike will empower you to make informed decisions in this evolving landscape. Your mortgage is a fundamental aspect of your financial future, and it’s essential to ensure it’s built on solid ground.

Get in touch with us today to discover how we can assist you on your journey to homeownership.

20 Jun

Unlock Savings: Top Refinance Options for Homeowners in 2024

Refinancing

Posted by: Michael Greene

Unlock Savings: Top refinance options for homeowners to consider in 2024. Hey there, fellow homeowners! If you’re reading this, you’re probably wondering if refinancing your mortgage is the way to go. Spoiler alert: it just might be! As a friendly mortgage broker who’s seen it all, I’m here to guide you through the maze of refinancing options. According to reports Mortgage delinquency rates in Ontario exceed $1B. Should we be concerned? This is a sign the more Canadian households than ever before, need help to navigate this interest rate environment and making an informed decisions that will save them money. Believe me, you don’t want to be one of those Canadians leaving money on the table by not negotiating their mortgage renewal rates

So, let’s dive in and find the perfect solution for you. And don’t worry, I promise not to bore you with too much mortgage jargon—unless you’re into that sort of thing!

1. Rate-and-Term Refinance

Think of this as the “classic combo” of refinancing. You’re simply swapping out your current mortgage for a new one with a different interest rate or term. It’s like upgrading your old phone without changing your number—same house, just better payments.

Why You’ll Love It:

Potentially lower monthly payments (more money for that Tim Hortons run!).
Or, you could speed up your loan payoff—because who wants a mortgage forever?

Why You Might Not:

There are some closing costs, kind of like paying for a nice meal out. However, some banks do give you a credit of up to $3,000 to go towards your total costs.
You’ll need a decent credit score—time to pay those credit card bills!

Perfect For: Homeowners looking to save on interest or those eager to get rid of their current bank mortgage faster because of a not so favourable renewal rate coming up. Who doesn’t like the sound of that?

2. Equity Refinance Option

Need to consolidate your high interest credit cards or some extra cash for that kitchen reno or maybe a dream vacation? With an equity refi, you borrow more than you owe and pocket the difference. Think of it as turning your house into an ATM—but one that actually improves your financial picture (unlike the usual ATMs that just eat your card).

Why You’ll Love It:

You get a chunk of cash for whatever you need—renovations, debt consolidation, tuition, or maybe that classic car you’ve been eyeing.
It’s often at a lower interest rate than your average credit card or personal loan. Who needs high-interest debt, anyway?

Why You Might Not:

It increases your mortgage balance and monthly payments. Remember, you’ll have to pay it back!
It taps into your home’s equity. So if the housing market takes a dip, you might owe more than your home’s worth. Yikes!

Perfect For: Homeowners with significant equity who need a hefty amount of cash for big expenses. Just remember, this isn’t Monopoly money—spend wisely!

3. Home Equity Line of Credit (HELOC)

Imagine having a financial safety net that you can dip into whenever you need. A HELOC lets you borrow against your home’s equity up to a certain limit, much like a credit card. The best part? You only pay interest on what you borrow, not the whole shebang.

Why You’ll Love It:

Flexibility to borrow only what you need, when you need it. It’s like having a secret stash of cash for emergencies or spur-of-the-moment splurges.
Lower interest rates compared to personal loans or credit cards. Those home projects just got a little cheaper!

Why You Might Not:

Variable interest rates mean your payments can go up and down like a roller coaster. Hold on tight!
Your home is on the line. If you can’t repay, you risk foreclosure. Not exactly a pleasant thought.

Perfect For: Homeowners who want access to funds for ongoing expenses like home improvements or unexpected life events. It’s like having a rainy-day fund, but better.

4. Interest-Only Refinance

Looking for a way to lower your monthly payments temporarily? An interest-only refinance lets you pay just the interest on your mortgage for a set period. It’s a bit like taking a financial breather—giving you some extra cash flow when you need it most.

Why You’ll Love It:

Lower monthly payments during the interest-only period mean more money in your pocket for the fun stuff.
Great for managing finances during tough times or if your income is temporarily lower.

Why You Might Not:

You’re not reducing your loan’s principal, so you’re not making a dent in the overall balance.
Payments will jump once the interest-only period ends. Be prepared for that!

Perfect For: Homeowners who need temporary payment relief and expect their financial situation to improve in the future. Just don’t forget that the mortgage principal isn’t going anywhere!

5. Reverse Mortgage Refinance

For my seasoned homeowners aged 55 and up, this one’s for you. A reverse mortgage lets you convert your home’s equity into tax-free cash without selling or moving. It’s like turning your home into a pension plan!

Why You’ll Love It:

No monthly mortgage payments. You heard that right—you stay in your home and get paid.
Provides a steady income stream during retirement, making those golden years a little shinier.

Why You Might Not:

It reduces the equity in your home, which might affect how much you leave to your heirs. Sorry, kids!
Fees and interest can pile up over time, which can shrink your nest egg.

Perfect For: Senior homeowners looking to supplement their retirement income while staying put. It’s a great way to enjoy the fruits of your lifelong investment—your home.

6. Mortgage Switch Refinance

Feel like your current mortgage is more of a bad romance than a perfect match? Maybe it’s time for a mortgage switch. This option lets you switch to a new lender with better terms or lower interest rates. It’s like breaking up with your old mortgage for a better one. No hard feelings!

Why You’ll Love It:

You might snag a lower interest rate, reducing those monthly payments. More savings, less stress!
Some lenders offer cash incentives or cover the switching costs. Free money? Yes, please!

Why You Might Not:

There could be prepayment penalties for ditching your current lender. Always read the fine print.
You’ll need to qualify for the new mortgage, so make sure your credit and finances are in good shape.

Perfect For: Homeowners who aren’t happy with their current mortgage terms and want to shop around for a better deal. Think of it as trading up to a better mortgage relationship.

Things to Consider Before Refinancing

Before jumping into any refinancing options, homeowners keep these in mind:

Closing Costs: Just like moving, refinancing can come with costs—appraisals, legal fees, and sometimes penalties for breaking your current mortgage. Make sure the benefits outweigh these expenses.
Credit Score: A good credit score is your ticket to better rates. Check your score and clean up any issues before applying. Pay those bills on time, folks!
Financial Goals: Your refinancing choice should align with your long-term goals. Want lower payments now or to pay off your mortgage sooner? Choose wisely based on your life plans.

Conclusion on Refinance Options

With income challenges and home values being the leading factors to getting approved, any good news are welcomed. Especially if values are starting to stack up in your home Bank of Canada officials worry that rate cuts may overheat the housing market this means more equity for you to work with. Also, keep in mind that your income will affect your qualifications, in a previous post in break all that down. Check it out here Mortgage Debt Ratios: Basics of GDS & TDS

Refinancing your mortgage in 2024 can be a game-changer for your finances, and by utilizing some of these refinance options homeowners can get ahead. Whether you’re looking to lower your interest rate, access your home’s equity, or adjust your payment structure, there’s an option that’s right for you. Take the time to explore these refinance options and choose the one that best fits your needs and future goals.

Need help figuring out which refinance options suits you best? Reach out to me today, and we’ll find the perfect refinance solution for your situation. Let’s make 2024 the year of smart financial moves and a mortgage that works for you!

Get in touch with us today to get started.